Sun, June 16, 2024

Swiss Franc Dips to 0.9000: Performance and Predictions

Wibest – Franc: Euro and Swiss franc (chf) coins and bills.

Quick Look:

  • Current Performance: USD/CHF trades at 0.9000, its lowest since late March.
  • Technical Indicators: Shows a bearish trend, forming an evening star pattern and falling below the 50-day moving average.
  • Market Expectations: Possible Fed rate cuts by September; Swiss CPI data pivotal for SNB’s interest rate decisions.

The Swiss Franc to USD pair has extended its downward trend for the third consecutive trading session. This time, it closed near the 0.9000 mark. The pair has fallen by over 3% from its peak earlier this year, hitting its lowest point on May 16th. Mixed results from US manufacturing PMI have contributed to the pair’s steep drop. The formation of an evening star pattern and a movement below the 50-day moving average are key technical indicators of the pair’s bearish trend. However, it has found some support at the 200-day moving average. Therefore, forming a head and shoulders pattern which might signal further declines.

Swiss CPI and USD Data: Key Events for USD/CHF

The Swiss Franc has shown considerable strength ahead of May’s anticipated release of the Swiss Consumer Price Index (CPI) data. Economists scheduled for publication on Tuesday predict a 0.4% month-on-month increase and a 1.3% year-on-year rise in the headline CPI.

Despite the Dollar to Swiss Franc decline, the US Dollar has rebounded amidst market uncertainty ahead of a busy week of US economic data releases. The ISM manufacturing PMI, expected to rise slightly from 49.2 to 49.8, will be closely watched, especially the New Orders and Prices Paid Indexes. Key data releases include ISM Manufacturing and Services PMI, ADP Employment Change, Nonfarm Payrolls (NFP) for May, and JOLTS Job Openings for April.

Following mixed manufacturing PMI numbers, the NFP data will be critical, with factory orders and the JOLTS job openings report also due on Tuesday. Economists forecast a drop in job openings from 8.48 million to 8.4 million. On Wednesday, ADP is set to release private payroll data, with median estimates indicating an addition of 175,000 jobs in May.

Fed Rate Cuts Expected in Q4: Market Outlook

Market participants anticipate significant indications regarding the timing of potential interest rate cuts by the Federal Reserve. The consensus is that rate reductions could begin at the September meeting, with the base case scenario suggesting cuts in the fourth quarter, particularly following the general election.

The forthcoming Swiss CPI data will be pivotal in determining whether the Swiss National Bank (SNB) will need to consider further rate cuts. A lower inflation report could increase the likelihood of continued interest rate reductions by the SNB.

USD/CHF Targeting 0.8900: Forecast and Strategies

The Swiss Franc is projected to maintain its downward trajectory, with sellers potentially targeting the key support level at 0.8900. A stop-loss is recommended at 0.900 to manage risks effectively.

The USD/CHF pair faces a challenging outlook due to both technical indicators and fundamental factors. The strength of the Swiss Franc and upcoming economic data from both Switzerland and the US will play crucial roles in determining the pair’s future performance. Investors and traders should remain vigilant and consider the broader economic context when making trading decisions.

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