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USD/CHF Needs To Clear 0.9520 For Hopes of Fresh Upside

Aayush Jindal

Aayush Jindal

Key Highlights

  • USD/CHF traded as low as 0.9376 before starting an upside correction.
  • A crucial bearish trend line is forming with resistance near 0.9490 on the 4-hours chart.
  • The US Manufacturing PMI (Prelim) increased sharply from 39.8 to 49.6 in June 2020.
  • The US Services PMI also jumped from 37.5 to 46.7 in June 2020 (Prelim).

 

USD/CHF Technical Analysis

The US Dollar remained in a bearish zone and broke the 0.9500 support against the Swiss Franc. USD/CHF traded as low as 0.9376 before starting an upside correction.

Looking at the 4-hours chart, the pair recovered above the 0.9450 and 0.9500 levels. However, it failed to clear the 0.9550 resistance, and remained below both the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

The pair started a fresh decline below 0.9500. It traded below the 50% Fib retracement level of the upward move from the 0.9376 low to 0.9553 high.

More importantly, there is a crucial bearish trend line forming with resistance near 0.9490 on the same chart. It seems like the pair is facing a strong resistance near 0.9500 and 0.9520.

A successful break above the 0.9520 level and the 100 SMA is needed to start a strong upward move. Conversely, the pair remains at a risk of more losses below the 0.9400 support zone. The next key support is seen near the 0.9320 level.

Fundamentally, the US Manufacturing Purchasing Managers Index (PMI) for June 2020 (Prelim) was released by the Markit Economics. The market was looking for an increase from 39.8 to 48.0.

The actual result was positive as the US Manufacturing PMI climbed to 49.6. The US Services PMI also jumped from 37.5 to 46.7 in June 2020 (Prelim).

The report added:

Manufacturers and service providers alike registered much softer declines in output compared to May.

Overall, USD/CHF must surpass 0.9520 to start a fresh increase. If not, it might soon break the 0.9400 support level. Looking at EUR/USD and GBP/USD, both pairs climbed higher steadily.

Upcoming Economic Releases

  • German IFO Business Climate Index for June 2020 – Forecast 85.0, versus 79.5 previous.
  • US Housing Price Index for April 2020 (MoM) - Forecast +0.1%, versus +0.1% previous.