Bullish View
- Buy the USD/CHF pair and a take-profit at 0.9800.
- Add a stop-loss at 0.9660.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.9670 and a take-profit at 0.9600.
- Add a stop-loss at 0.9750.
The USD/CHF price has continued its upside as the US dollar continued its strong rally and after the latest Switzerland unemployment rate data. It is trading at 0.9711, which is the highest it has been since June 17th. It has risen by 2.31% above the lowest level in June.
SNB and Fed Divergence
The USD/CHF pair rallied as investors reacted to the rising risks of a recession. Most analysts believe that the world economy is heading towards its worst financial crisis since the Covid-19 pandemic. According to Wall Street Journal, odds of a recession have risen from 20% in January to 40% in June.
In periods of turmoil, investors rush to the safety of the US dollar. This explains why the dollar index has risen to a two-decade high of over $106. The currency has risen to a 20-year high against the euro and to a 24-year high against the yen.
The Swiss franc has done relatively better than other peers because of the surprise actions by the Swiss National Bank. In June, the bank surprised the market when it decided to hike interest rates by 0.50%. Most analysts were expecting that the bank would leave rates unchanged. The rate hike was the first time that the bank did so in more than a decade.
The USD/CHF pair held steady as investors reacted to the latest Swiss unemployment rate data. Data by the country’s statistics agency showed that the rate declined from 2.1% to 2.0%. This means that the country has one of the lowest unemployment rate globally.
The Swiss economic data came on the same day that the ADP is expected to publish its estimate of the latest private jobs data. Analysts expect the numbers to show that the sector created 200k jobs. The US will also publish the latest NFP data on Friday.
USD/CHF Forecast
The USD/CHF price declined sharply in June after the hawkish SNB decision. The pair dropped to a low of 0.9495. Since June 29th, the pair has been in a strong bullish trend. It has managed to move to the second resistance of the standard pivot point.
The pair moved above the 25-day moving average while the MACD has continued rising. It has formed a rounded bottom pattern. Therefore, the pair will likely keep rising as buyers target the key resistance at 0.9800.
