USD/CHF falls below 0.8500, focus shifts to Swiss CPI and GDP data
FUNDAMENTAL OVERVIEW:
- USD/CHF struggles near 0.8490 in early Monday’s European session.
- The spotlight will be on the US Non-Farm Payrolls (NFP) data for August this Friday.
- Escalating geopolitical tensions in the Middle East could bolster the Swiss Franc against the US Dollar.
The USD/CHF pair drifts lower to around 0.8490 during early European trading on Monday. The weakening US Dollar drives this decline, as speculation increases that the US Federal Reserve may cut rates in its September meeting. On Tuesday, Switzerland will release its August Consumer Price Index (CPI) and second-quarter Gross Domestic Product (GDP) data. The Swiss economy is expected to grow by 0.5% quarter-on-quarter in Q2.
The US Federal Reserve’s dovish approach continues to pressure the Greenback. Last week, Atlanta Fed President Raphael Bostic, known for his typically hawkish views on the FOMC, suggested that it might be time to reduce borrowing costs due to easing inflation and a higher-than-anticipated unemployment rate.
Investors will closely monitor the release of US employment data on Friday, including the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for August.
The NFP is projected to increase 163K jobs in August, while the Unemployment Rate is expected to decrease slightly to 4.2%. Any signs of weakness in the US labor market could raise expectations of a Fed rate cut, potentially putting additional selling pressure on the USD.
Ongoing geopolitical tensions in the Middle East might strengthen safe-haven currencies like the Swiss Franc (CHF). CNN reported early Monday that protests have erupted across Israel following the military’s recovery of six hostages’ bodies, which it claims were killed by Hamas in Gaza. Israel’s largest labor union has called for a strike, warning that the “entire Israeli economy will shut down.”
USD/CHF TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CHF is trading within a down channel.
USD/CHF is moving above 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.8513
Immediate support level: 0.8444
HOW TO TRADE USD/CHF
USD/CHF has recently experienced a significant downturn. After a sharp initial rise, the pair encountered resistance and reversed direction. Prices have been steadily declining, forming lower lows along the way. A recent attempt to recover was unsuccessful, leading to a more aggressive decline.
Currently, USD/CHF is in a temporary pullback. However, it remains below a key resistance level. If this level continues to hold, we can expect further downward movement in the pair.