USD/CHF Could Extend Losses Unless It Breaks 0.9800

Key Highlights

  • USD/CHF failed to continue above 0.9800 and started a fresh decrease.
  • A major bearish trend line is forming with resistance near 0.9770 on the 4-hours chart.
  • The US Consumer Price Index increased 0.3% in April 2020 (YoY), down from the last 1.5%.
  • The UK GDP is likely to decrease 2.5% in Q1 2020 (Preliminary) (QoQ).

USD/CHF Technical Analysis

This past week, the US Dollar extended its rise above the 0.9700 resistance against the Swiss Franc. However, USD/CHF failed to clear the 0.9780-0.9800 resistance and recently started a fresh decrease.

Looking at the 4-hours chart, the pair traded as high as 0.9783 and declined below the 0.9750 support zone. The decline was such that the pair declined below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

It tested the 50% Fib retracement level of the upward move from the 0.9588 low to 0.9783 high. On the downside, the first key support is visible near the 0.9660 level.

Any further losses could lead the pair towards the 76.4% Fib retracement level of the upward move from the 0.9588 low to 0.9783 high at 0.9634. The next major support is near the 0.9600 zone.

Conversely, USD/CHF could again rise above the 0.9750 level. However, there are many hurdles forming near the 0.9780 and 0.9800 levels. There is also a major bearish trend line forming with resistance near 0.9770.

Therefore, a successful close above the 0.9800 resistance zone is needed for upside continuation towards the 0.9880 and 0.9920 resistance levels in the coming sessions.

Fundamentally, the US Consumer Price Index for April 2020 was released by the US Bureau of Labor Statistics. The market was looking for a 0.8% decline in the CPI compared with the previous month.

The actual result was similar to the forecast, as the US CPI decreased 0.8% in April 2020 (MoM). Looking at the yearly change, the CPI increased 0.3%, down from the last 1.5%.

The report added:

The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957.

Overall, USD/CHF remains at a risk of more losses as long as it is below 0.9800. Looking at EUR/USD, the pair still need to clear the 1.0900 resistance to move into a positive zone.

Upcoming Economic Releases

  • UK GDP Q1 2020 (Preliminary) (QoQ) - Forecast -2.5%, versus 0% previous.
  • UK Industrial Production for March 2020 (MoM) - Forecast -5.6%, versus +0.1% previous.
  • UK Manufacturing Production for March 2020 (MoM) - Forecast -6.0%, versus +0.5% previous.
  • US Producer Price Index March 2020 (MoM) – Forecast -0.5%, versus -0.2% previous.