
Oil Quietly Hands the Fed a Reason to Stay Hawkish
Oil prices and the U.S. dollar are both on the front foot as elevated energy costs feed Fed warnings that inflation may prove sticky.
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Oil prices and the U.S. dollar are both on the front foot as elevated energy costs feed Fed warnings that inflation may prove sticky.

Donald Trump’s speech at the UN seems to have poured cold waters on any hopes of a deal. Crude oil, the US dollar and bond yields all bounced back from their lows, causing fresh pressure on foreign currencies, European indices and to a lesser degree precious metals.

USD/CHF has surged to fresh yearly highs, but stretched momentum is raising the risk of near-term exhaustion as the rally extends.

Sr. Technical Strategist Michael Boutros highlights the levels that matter on the USD Majors, commodities, and indices charts ahead of this week's Fed decision.

USD/CHF is closing in on pivotal resistance after a three-week rally, with next week's Fed decision raising the stakes for the yearly highs.

Well, that was quite a straightforward initial reaction in the market. But once the dust settled, we saw a quick return to pre-NFP levels on many markets, as traders realised it is the CPI – due next week – that matter more right now. Meanwhile, Trump has bizarrely suggested that the Fed should CUT rates because of the strong jobs numbers. That’s not going to happen, rest assured.

USD/CHF has broken the July downtrend and surged to a five-week high, putting the focus on whether bulls can sustain the recovery.

The franc was the standout G10 performer after Treasury announced larger long-end buybacks this week. Strong fundamentals and shifting correlations suggest the move may have further to run.

Today’s US jobs report was the first of the four major releases before the Fed’s next meeting in September. As it turned out, this was a pretty bad report and as a result, the odds of a September rate hike fell to around 44% from north of 55% before the data was released.

USD/CHF is trading in a tight weekly opening range just above uptrend support ahead of NFP. The breakout could fuel the next leg in trend.

USD/CHF reversed sharply after hitting major resistance, leaving traders focused on whether last week's reversal marks a pause or something more significant.

Fresh yearly highs have shifted focus to whether bulls can extend the breakout as USD/CHF approaches its biggest technical test of the year.

Could EUR/CHF's breakout be the blueprint for USD/CHF? Similar technical structures suggest traders should be paying close attention.
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