. USD/CHF Strengthens Pre-US PMI Data

USD/CHF Strengthens Pre-US PMI Data

16 Feb 2024

USD/CHF inches up to approximately 0.8810 in anticipation of the upcoming US economic data.

FUNDAMENTAL OVERVIEW:

  • USD/CHF advances with a strengthened US Dollar ahead of US PMI data.
  • The Greenback strengthens despite a risk-off sentiment, fueled by softer US Retail Sales.
  • Scotiabank anticipates the Swiss National Bank (SNB) to decrease interest rates in 2024.

USD/CHF rebounds from recent declines, bolstered by a stronger US Dollar (USD) amid prevailing risk-off sentiment. Enhanced US Treasury yields contribute to the Greenback’s stability, supporting the USD/CHF pair, trading higher around 0.8810 in the European session on Friday.

The US Dollar Index (DXY), gauging the USD against major currencies, advances towards 104.30. The 2-year and 10-year US bond yields climb to 4.60% and 4.26%, respectively. Traders are anticipating the release of the Producer Price Index (PPI) data and Michigan Consumer Sentiment Index in the upcoming North American session on Friday.

The USD/CHF pair faced downward pressure on Thursday due to mixed US economic data. The Greenback weakened as January’s Retail Sales (MoM) reported a decline contrary to expectations, and the Retail Sales Control Group also decreased compared to December’s rise.

Scotiabank forecasts a moderate underperformance of the Swiss Franc (CHF) in 2024, anticipating a potential easing in the Swiss National Bank’s (SNB) interest rates. The economists expect a modest correction in the CHF’s currently somewhat overvalued status.

Swiss Statistics unveiled the Industrial Production (YoY) report for Q4 2023 on Friday, revealing a 0.4% decline in factory and manufacturing output. Coupled with decelerated Swiss consumer prices, these statistics may have exerted downward pressure on the Swiss Franc.

USD/CHF TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

USD/CHF is currently trading within an up channel.

USD/CHF is positioned above the 20&50 Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Neutral trend.

Immediate Resistance level: 0.8814

Immediate support level: 0.8769

HOW TO TRADE USD/CHF

After a significant decline, USD/CHF found support and reversed to the upside, establishing a higher high structure. Currently trading around a crucial resistance zone, a potential breakthrough could pave the way for further upside.

TRADE SUGGESTION- STOP BUY– 0.8823, TAKE PROFIT AT- 0.8900, SL AT- 0.8781.