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Aayush Jindal

Key Highlights

  • USD/CHF started a decent recovery from the 0.9573 low.
  • A major bearish trend line is forming with resistance near 0.9690 on the 4-hours chart.
  • The US ADP Employment declined 2,760K in May 2020, less than the -9,000K forecast.
  • The US Initial Jobless Claims in the week ending May 30, 2020 could decline from 2123K to 1800K.

USD/CHF Technical Analysis

In the past few days, the US Dollar declined steadily from well above 0.9700 against the Swiss Franc. USD/CHF broke the 0.9650 support and traded to a new monthly low at 0.9573.

Looking at the 4-hours chart, the pair settled well below the 0.9700 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

It recently started an upside correction from the 0.9573 low. It broke the 0.9620 resistance, plus the 23.6% Fib retracement level of the downward move from the 0.9728 swing high to 0.9573 low.

On the upside, there is a major hurdle forming near the 0.9680 and 0.9690 levels. There is also a major bearish trend line forming with resistance near 0.9690. The 100 and 200 SMA’s are also near the trend line resistance to prevent more upsides.

To move into a positive zone, USD/CHF must settle above the 0.9700 level. If not, it could complete the current correction wave anywhere near 0.9680 and start a fresh decline.

The first major support is near the 0.9620 level, but the main support is near the 0.9575 level. Any further losses could lead the pair towards the 0.9550 level.

Fundamentally, the US Employment Change figure for May 2020 was released by the Automatic Data Processing, Inc. The market was looking for a 9,000K decline in jobs, less than the last -20,236K.

However, the result was better than the forecast, as the private-sector employment declined by 2,760K from April to May, on a seasonally adjusted basis. The last reading was also revised from -20,236K to -19,557K.

Overall, USD/CHF could struggle to clear the 0.9680 resistance zone. Looking at EUR/USD, the pair broke the 1.1200 resistance zone and traded to a new multi-week high. Similarly, GBP/USD extended its rise above 1.2550.

Upcoming Economic Releases

  • ECB Interest Rate Decision – Forecast 0%, versus 0% previous.
  • US Initial Jobless Claims - Forecast 1800K, versus 2123K previous.