Key Points: -
- The USD/CHF pair continues to face selling pressure, reaching its lowest levels since January 2015, as indicated on Tuesday.
- Switzerland's trade surplus expands beyond expectations in June, with both exports and imports showing positive growth.
- The US Dollar experiences a decline as the market reevaluates its expectations regarding the Federal Reserve's monetary policy, following mostly negative economic data.
- Market participants are closely monitoring risk catalysts ahead of next week's crucial Federal Open Market Committee (FOMC) meeting.
Today's Scenario: -
The USD/CHF pair continues to decline and is currently at its lowest levels since January 2015, down for the second consecutive day. The Swiss Franc (CHF) pair justifies the downtrend, driven by the weaker US dollar and stronger Swiss trade numbers, trading around 0.8560 during Thursday's European session.
Swiss Trade Balance for June rose to 4,823M, exceeding expectations of 4,031M, despite being lower than the previous reading of 5,442M. Details indicate that exports grew to 24,917M from 23,879M, and imports also rose to 20,093M compared to 18,438M in May.
The broad weakness in the US dollar is a contributing factor to the USD/CHF pair's decline. The US Dollar Index (DXY) drops 0.25% intraday, testing the 100.00 round figure, after rebounding for two days from its lowest level since April 2022. The greenback's performance is influenced by downbeat US housing data and mixed concerns about the Federal Reserve (Fed), while optimism at US banks is being overlooked.
The Swiss Franc's safe-haven appeal and the market's cautious mood, driven by mixed headlines about China and global central banks, are also influencing the USD/CHF bears.
Additionally, the Swiss National Bank's (SNB) hawkish bias contrasts with the market's uncertainty about the Fed's future actions beyond July, putting further pressure on USD/CHF prices.
Amidst these factors, the S&P 500 Futures are showing mild losses, and US Treasury bond yields are trading mixed at the weekly low.
Traders of the USD/CHF pair should keep an eye on risk catalysts, including the US Initial Jobless Claims and Existing Home Sales data. However, the key event to watch for clear directions is the Federal Open Market Committee (FOMC) monetary policy meeting announcements scheduled for next week.
Diagram of USD/CHF: -
Economic Events : -
Buy Scenario: -
On the upside, the 1st resistance level at 0.8759 is identified as a pullback resistance, which may act as an obstacle to upward price movement. It is crucial to monitor how the price reacts around this level, as a failure to break above it could indicate a continuation of the bearish momentum. Till we do not advise to buy USD/CHF.
Sell Scenario: -
The USD/CHF currency pair is currently showing a bearish trend, indicating the potential for further downward movement towards the 1st support level.
The 1st support level at 0.8529 is particularly important as it aligns with the 100% Fibonacci Projection. This level could serve as a strong support zone, attracting buyers and potentially leading to a halt in the price decline. Furthermore, the 2nd support level at 0.8445 corresponds to the -61.8% Fibonacci Expansion, adding to its significance as a potential area of support. Till we do not advise to sell USD/CHF.
Support and Resistance Level: -
S1 0.8564 - R1 0.8610
S2 0.8542 - R2 0.8635
S3 0.8517 - R3 0.8657