Dollar and yen were initially sold off as the week started but gained some footing as the day goes on. Commodity currencies are generally firm with Aussie and Kiwi mildly up against other majors, but Canadian dollar is somewhat lagging behind. Crude oil attempted to extend recent rise and breached 82 level briefly but again there isn't much follow through buying and oil retreats approaching US session. Gold is also consolidating in tight range for the moment.
In a press conference at BIS, ECB President Trichet said that the market has been improving and we can phase out non- conventional measures. However, Trichet then emphasized there shouldn't be 'over-interpretation' of phasing out in terms of monetary policy, hinting that there might be be rate hikes in near term.
On the data front, Japan current account surplus widened to JPY 1.71T in January. Eco watcher survey improved to 42.1 in February. Swiss unemployment rate was unchanged at 4.10% in February. Retail sales rose more than expected by 4.4% yoy in January. Eurozone Sentix Investor Confidence unexpectedly improved to -7.5 in March. German industrial production rose 0.6^ mom in January. Canadian housing starts beat expectation by rising to 197k in February.
Looking at the dollar index, recent consolidation from 81.34 is still in progress and another fall might be seen to 79.82 support and below. But after all, we're expecting strong support from 79.56 cluster support (38.2% retracement of 76.60 to 81.34 at 79.52) to conclude the consolidation and bring rally resumption. Above 80.88 minor resistance will flip intraday bias back to the upside for retesting 81.34 high first.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0714; (P) 1.0762; (R1) 1.0789; More.
USD/CHF's consolidation from 1.0897 is still in progress and another fall could still be seen to 1.0648 support and below. Nevertheless, downside is still expected to be contained by 1.0608 cluster support (38.2% retracement of 1.0131 to 1.0897 at 1.0604) and bring rally resumption. On the upside, above 1.0809 minor resistance will flip intraday bias back to the upside. Decisive break of 1.0897 will confirm that whole rally from 0.9916 has resumed. Also, sustained trading above medium term trend line resistance (now at 1.0803) will pave the way to 161.8% projection of 0.9916 to 1.0506 from 1.0131 at 1.1086 next.
In the bigger picture, medium term correction from 1.2296 should have completed with three waves down to 0.9916 already. Current rise from 0.9916 is tentatively treated as resumption of the long term up trend from 2008 low of 0.9634. Sustained break of mentioned medium term trend line resistance (now at 1.0803) will further affirm this view. In such case, we'd be looking at stronger rise to 1.1963/2296 resistance zone in medium term. On the downside, sustained break of medium term rising trend line support (now at 1.0415) is needed to invalidate this bullish view. Otherwise, outlook will remain bullish.