USDCHF Symmetrical Triangle Consolidation

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USDCHF has formed lower highs and higher lows to consolidate inside a symmetrical triangle formation. Price has just bounced off the top and might be due to test the bottom from here.

The 100 SMA is still above the longer-term 200 SMA, though, so the path of least resistance is to the upside. In addition, the moving averages appear to be holding as dynamic inflection points at the moment.

However, RSI is just cruising at middle ground to signal that further consolidation is likely. Stochastic, meanwhile, appears to be moving higher so the pair might follow suit.

Dollar pairs are consolidating ahead of the top-tier events due later this week and likely because of the lower liquidity during the Fourth of July holiday. The FOMC minutes are on today’s docket and dollar traders are eager to glean more clues on the chances of seeing two more interest rate hikes this year.

Recall that the Fed hiked rates in their earlier meeting and dropped a few more hawkish hints by upgrading economic forecasts and adjusting its dot plot. However, several officials have been emphasizing their cautious views in recent testimonies, so the minutes could throw some focus on the split among policymakers.

Meanwhile, a stronger than expected jobs report could still fuel rate hike expectations. Analysts expect to see a 195K increase in hiring for June versus the previous month’s 223K gain. Of particular interest also is the average hourly earnings figure as Fed officials continue to hold out for stronger signs of wage growth that could fuel inflation and spending.

A disappointing read could dash hopes of seeing two more hikes, which would be strongly dollar bearish, possibly even leading to a break below the triangle support. Note that the dollar has also been under pressure due to U.S. trade tensions with China and the EU, leaving the franc to shore up the safe-haven flows.

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