AUD/CHF Bullish Sentiment Shifts on Rising Australian Inflation Expectations

Date: Thursday, June 27, 2024 

Thursday Market Overview: 

While the euro continues to weaken amidst political uncertainties in Europe, the Swiss franc has lost some of its support from high interest rates. Conversely, the Australian dollar is experiencing a boost in sentiment due to a more hawkish than expected tone from the Reserve Bank of Australia (RBA) and the potential for further rate hikes later this year. This shift comes after inflation expectations in Australia rose, as reported earlier today, leading to a bullish sentiment for the AUD. 

Technical Analysis: 

On the four-hour chart, the AUD/CHF pair has broken out of a previous downtrend and is now charting a mild upward trend, with prices making higher highs and higher lows above the moving averages. The increasing bullish momentum has enabled buyers to challenge the short-term resistance at 0.59804. If they succeed in closing above this level, the next target will be the key resistance at 0.59951. A break above this critical resistance would signal a continuation of the upward trend, with further targets at 0.60056, 0.60213, and 0.60336. 

Alternative Scenario: 

If sellers manage to reclaim the 0.59804 resistance level sustainably, the price may retrace towards the support at 0.59566, which is near the 100-period moving average. As long as this level holds, the overall bullish trend can be expected to continue. 

Market Overview and Key Levels 

Resistance Levels: 

• Resistance 4: 0.60336 
• Resistance 3: 0.60213 
• Resistance 2: 0.60056 
• Resistance 1: 0.59951 

Current Price (at the time of analysis): 0.59808 

Support Levels: 

• Support 1: 0.59804 
• Support 2: 0.59566 

Impactful Events: 

Aside from a flurry of economic reports from the US, ranging from quarterly GDP growth to capital goods orders, the key economic data related to the Australian dollar towards the end of the week will be housing credit and private sector credit reports. These reports are crucial for gauging the economic health and potential monetary policy adjustments in Australia. 

Oscillators and Risk Warnings: 

• RSI (Relative Strength Index): Bullish, indicating strong buying momentum. 
• MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend. 
• Moving Averages: Bullish, reflecting the current positive price action. 

Conclusion: 

The AUD/CHF pair is currently benefiting from rising inflation expectations in Australia and a supportive stance from the RBA. Technically, a break above the key resistance at 0.59951 would confirm a continuation of the bullish trend, with higher targets in sight. However, if sellers reclaim the 0.59804 level, a retracement towards 0.59566 is possible, where buyers might reassert control. 

Traders should closely monitor the upcoming economic reports, particularly the US data and Australian credit figures, as these will provide important insights into market sentiment and potential price movements. Staying attuned to these indicators and key technical levels will help investors navigate the current market dynamics more effectively.