U.S. Dollar Strengthened its Position Against Swiss Franc

Interestingly, after a strong decline, the U.S. Dollar found support near 0.8870 against the Swiss Franc. It is worth noting that USD/CHF exceeded the 0.8920 resistance. This is not the end of the story as it could face hurdles near 0.9000.

Let’s have a look at the 4-hour chart. As can be seen from the chart, the pair traded as low as 0.8871 and climbed back above 0.8940. Interestingly, there was also a break above a contracting triangle with resistance near 0.8935.

Moreover, the pair even cleared the 50% Fib retracement level of the download move from the 0.9045 high to 0.8871 low. Importantly, the next major resistance is near the 0.8990 level (the last breakdown zone).

Furthermore, any more gains could lead the pair towards the 0.9000 hurdles. Interestingly, a close above 0.9000 could start a strong increase. However, if this is not going to happen, there is a risk of a fresh decline towards the 0.8920 as well as 0.8900 support levels. Also, the 200 simple moving average (green, 4-hours) is also near the 0.8900 level to provide support.

Essentially, the U.S. Retail Sales figure was released by the U.S. Census Bureau. Notably, the market was looking for a 1% increase in sales compared with the previous month.

It is worth mentioning that the actual result was better than the forecast, as the U.S. retail sales grew 5.3%. In addition, the last reading was revised down from -0.7% to -1%.

As a reminder, total sales for November 2020 through January 2021 period were up 4.6% from the same period a year ago.

U.S. Dollar Index

On February 17, Dollar Index rose well after the strong U.S. Retails sales data and may indicate immediate weakness in major as well as EM currencies for a few sessions before a reversal is again seen. People should keep in mind that Euro may test 1.20-1.1948 while EUR/JPY may bounce back from 127. Moreover, the Australian Dollar and Pound may dip to 0.7680 and 1.3760 respectively in the near term. However, USD/CNY may remain ranged while USD/INR may rise to test 73 before dipping from there.

Last but not least, Dollar Index (90.93) rose to 91.06 yesterday after the U.S. Retail sales rose sharply from 5.88 (Y/Y% seen for December 2020) to 10.83 (Y.Y%) for January 2021. Interestingly, a break above 91 can take the Dollar Index to 91.50 or even 92 on the upside, and a sharp reversal can be seen after that time.