USD/CHF recovery faces headwinds ahead of US inflation data

August 07, 2023 09:38 AM PDT | By Invezz

USD/CHF recovery faces headwinds ahead of US inflation data — Image source: Invezz

US inflation data ahead

The USD to Swiss franc pair has remained in a tight range after the US jobs numbers. According to the Bureau of Labor Statistics (BLS), the economy added over 187k jobs in July after creating over 209k jobs in the previous month.

On a positive side, the jobless rate dropped from 3.6% to 3.55, signaling that the labor market is still tight. Wage growth expanded by 4.4% in July, a higher figure than what analysts were expecting.

Watch here: https://www.youtube.com/embed/vB_yhSd8U-U?feature=oembed

Therefore, these numbers mean that the Federal Reserve will likely continue hiking interest rates in the coming months. This view was confirmed by Fed’s Michele Bowman, who argued that inflation remains stubbornly high.

The next key USD/CHF news to watch will come out on Thursday when the US will publish the next inflation data. Economists believe that inflation darted upwards in July after falling sharply in June.

Precisely, economists expect that the headline consumer inflation jumped from 3.0% in June to 3.3% in July. The core CPI is expected to remain unchanged at 4.8%, which is much higher than the Fed’s target of 2.0%.

The USD/CHF price reacted mildly to the latest Swiss jobs numbers. According to the statistics agency, the unemployment rate remained at 1.9% in July. Swiss jobs and inflation numbers rarely move the pair since the jobless rate has constantly been low.

The Swiss National Bank (SNB) and the Federal Reserve will deliver their next interest rate decision on September 20th and 21st, respectively.

USD/CHF technical analysis

USDCHF chart by TradingView

The daily chart shows that the USD to CHF exchange rate has been in a strong bearish trend in the past few months. It has dropped by more than 13% from the highest level since November.

The pair has dropped below the 25-day and 50-day exponential moving averages (EMA). it has also retested the important resistance at 0.8823, the lowest level on May 4th. It is also between the descending channel shown in orange. Therefore, the pair will likely continue falling as sellers target the key support 0.8600.

The post USD/CHF recovery faces headwinds ahead of US inflation data appeared first on Invezz.

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