Chart of the Day USDCHF

USDCHF Potential Reversal Zone - Probable Price Path

USD: US equities rose on Monday as a slew of corporate deal making activity and optimism toward the resumption of a COVID-19 trial sparked a broad market rally. US Treasury yields held steady on Monday as equities rebounded from sharp losses last week. The benchmark 10-year Treasury note yield was flat at 0.6715%. The yield on the 30-year Treasury bond was also little changed at 1.4210%. Key events ahead for the US Treasury market include 20-year bond reopening today (Tuesday), FOMC meeting, and 10-year TIPS reopening Thursday. The US economic docket will kick off on Tuesday with the Empire manufacturing index for September. Import and export prices, as well as industrial production and capacity utilization, all of August, will also be released.

CHF: The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of renewed risk liquidation in 2020, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle

From a technical and trading perspective, the USDCHF is potentially carving out an inverse head and shoulders pattern. Price is currently testing pivotal support for the reversal pattern at .9050, bulls will be watching for bids to emerge at this level. Bullish exposure should be rewarded with a daily close above the near term volume weighted average price sighted just above .9100. With closing confirmation bulls will target a breach if the neck line at .9200 to open a technical measured move target at .9360 which also coincides with structural and trendline resistance. 

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