Daily Analysis For USD/CHF 26-05-2023

Daily Analysis For USD/CHF 26-05-2023

USD/CHF Analysis
Key Points
• USD/CHF is currently trading in a sideways manner above the 0.9050 level, with investors awaiting the release of US Durable Goods Orders data.
• Meanwhile, weekly emergency lending by the Federal Reserve to banks has declined to its lowest level since the banking sector faced challenges in March.
• The overall market sentiment remains cautious as investors express concerns about the possibility of a US economic default.
Today's Scenario: - The USD/CHF pair is exhibiting volatile movements above the 0.9050 level during the early Tokyo session. Investors are anticipating a sideways trend in the Swiss Franc as their attention shifts towards the upcoming release of United States Durable Goods Orders data.
In early Asian trading, S&P 500 futures have experienced some losses following a strong recovery on Thursday. The overall market sentiment remains cautious as investors express concerns about the possibility of the United States economy announcing a default on its obligated payments due to differing proposals from the White House and Republican leaders.
House of Representatives member Kevin McCarthy has mentioned the difficulty in reaching an agreement due to diverging opinions on budget spending. However, he has emphasized the commitment to continue working towards a resolution.
The US Dollar Index (DXY) has shown signs of exhaustion in its upward momentum after reaching a fresh two-month high of 104.31. The resilience of the United States economy is starting to show signs of cooling off.
Reuters has reported that weekly emergency lending by the Federal Reserve (Fed) to banks has reached its lowest level since the banking sector faced challenges in March. Tighter credit conditions and a bleak economic outlook have compelled firms to operate with reduced capacity, relying on their retained earnings. This situation could lead to improved labor market conditions and allow the Fed to maintain a neutral stance on interest rates in its upcoming June monetary policy meeting.
Looking ahead, the focus will be on the release of US Durable Goods Orders data for April. The economic data is expected to show a contraction of 1.0%, following a previous expansion of 3.2%.
On the Swiss Franc front, investors will closely monitor the Q1 Employment Level data. According to the preliminary report, the Swiss labor market added 35,000 new employees in the first quarter.
Diagram of USD/CHF
USD/CHF
Economic Events and Scenario for USD/CHF
Economic Events : -
GMTEventImpactCurrency
00:30(Japan) Tokyo Core CPI YoYLowJPY
00:30(Japan) Tokyo CPI YoYLowJPY
00:30(Japan) Tokyo CPI Ex Food and Energy YoYLowJPY
02:30(Australia) Retail Sales MoMHighAUD
04:35(Japan) 3-Month Bill AuctionLowJPY
06:00(Japan) Leading Economic IndexLowJPY
06:00(Japan) Coincident IndexLowJPY
07:00(Lithuania) Retail Sales MoMLowEUR
07:00(Lithuania) Retail Sales YoYLowEUR
07:00(United Kingdom) Retail Sales ex Fuel MoMHighGBP
07:00(United Kingdom) Retail Sales ex Fuel YoYHighGBP
07:00(United Kingdom) Retail Sales YoYHighGBP
07:00(United Kingdom) Retail Sales MoMHighGBP
07:30(Switzerland) Non Farm PayrollsLowCHF
07:45(France) Consumer ConfidenceMediumEUR
08:15(Euro Area) ECB Enria SpeechLowEUR
08:40(Euro Area) ECB Lane SpeechMediumEUR
09:00(Italy) Consumer ConfidenceMediumEUR
09:00(Italy) Business ConfidenceMediumEUR
09:00(Austria) Bank Austria Manufacturing PMIHighEUR
10:10(Italy) 6-Month BOT AuctionLowEUR
11:00(France) Jobseekers TotalLowEUR
11:00(France) Unemployment Benefit ClaimsMediumEUR
11:00(Luxembourg) Balance of TradeLowEUR
13:30(Canada) Wholesale Sales MoMLowCAD
13:30(United States) Goods Trade BalanceHighUSD
13:30(United States) Wholesale Inventories MoMMediumUSD
13:30(United States) Core PCE Price Index MoMHighUSD
13:30(United States) Core PCE Price Index YoYLowUSD
13:30(United States) PCE Price Index MoMMediumUSD
13:30(United States) PCE Price Index YoYMediumUSD
13:30(United States) Personal Spending MoMHighUSD
13:30(United States) Personal Income MoMHighUSD
13:30(United States) Retail Inventories Ex Autos MoMMediumUSD
13:30(United States) Durable Goods Orders Ex Transp MoMHighUSD
13:30(United States) Non Defense Goods Orders Ex AirLowUSD
13:30(United States) Durable Goods Orders MoMHighUSD
13:30(United States) Durable Goods Orders ex Defense MoMHighUSD
15:00(United States) Michigan Consumer ExpectationsLowUSD
15:00(United States) Michigan Current ConditionsLowUSD
15:00(United States) Michigan 5 Year Inflation ExpectationsLowUSD
15:00(United States) Michigan Consumer SentimentHighUSD
15:00(United States) Michigan Inflation ExpectationsLowUSD
16:00(Canada) Budget BalanceLowCAD
18:00(United States) Baker Hughes Oil Rig CountLowUSD
18:00(United States) Baker Hughes Total Rig CountLowUSD
Buy Scenario: - On the upside, the current position of the top line of the rising wedge, near 0.9075, precedes the psychological level of 0.9100 and the peak reached on April 10, around 0.9115. These levels would pose challenges for USD/CHF buyers.
If the pair manages to break above these levels, it could potentially move towards the 61.8% Fibonacci retracement level of the downside move from March to May, located around 0.9205. Till we do not advise to buy USD/CHF.
Sell Scenario: - The USD/CHF pair is experiencing a decline, reaching an intraday low near 0.9040, as it records its first daily loss in four days during early Friday trading. This retreat comes after the pair encountered resistance from a three-week-old rising wedge bearish chart formation.
However, it is important to note that the MACD indicator is showing bullish signals and the RSI (14) line is above the 50.0 level. These factors suggest that the USD/CHF pair still maintains bullish momentum, making it difficult for bearish sentiment to prevail.
Another factor challenging sellers is the support confluence around the 0.9000 level, which includes the 50-day moving average (DMA) and the bottom line of the aforementioned wedge formation.
In the event that the USD/CHF price manages to close below the 0.9000 mark on a daily basis, it would potentially become vulnerable to reaching the yearly low near 0.8750.
However, there are several levels of support around 0.8860-50, as well as the monthly low around 0.8820, which could potentially limit further downward movement. Till we do not advise to sell USD/CHF.
Support and Resistance Level: -
SupportResistance
S1 0.9039-R1 0.9074
S2 0.9020-R2 0.9092
S3 0.9003-R3 0.9110

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