USD/CHF Price Forecast: $0.7940 Holds as Triangle Tightens Ahead of NFP Data
During European trading hours the USD/CHF currency pair is making a push towards $0.7940, building on a recovery that started...
Quick overview
- The USD/CHF currency pair is approaching $0.7940, supported by a recovery in the US Dollar after a recent stabilization.
- The US Dollar Index remains just above 98.20, with traders awaiting key economic data to guide future movements.
- Next week's US Nonfarm Payrolls report is crucial, with expectations of job growth slowing and potential downside risks.
- In Switzerland, low inflation signals keep the Swiss Franc stable, while the USD/CHF technical outlook shows a symmetrical triangle pattern.
During European trading hours the USD/CHF currency pair is making a push towards $0.7940, building on a recovery that started after the US Dollar stabilised last monday following a pull back. Despite the Swiss Franc remaining relatively flat, the US Dollar saw a modest boost in demand, helping the pair move back into positive territory.
The US Dollar Index is currently just above 98.20, still below its three-week high of 98.86 set on Monday. At the beginning of the week though the dollar did see a bit of an increase following the geopolitical developments around Venezuela – but that momentum has since started to fade leaving the dollar now to rely on the latest economic news rather than just household name news.
Domestically, we’re seeing mixed results. The ISM Manufacturing PMI has slipped even further into negative territory at 47.9. This is causing traders to get cautious & wait for clearer signs from the labour market before deciding on a specific direction.
Jobs Data Takes Center Stage for the Dollar
Next week the focus will be on the US Nonfarm Payrolls jobs report, which is expected to show an extra 55,000 jobs added to the US economy, down from 64,000 which we saw last time around – the unemployment rate is forecast to edge down to 4.5% though, however it does seem the risks are looking towards the downside.
This uncertainty in the jobs market stems from recent indicators showing that the ADP Employment Change unexpectedly showed a loss of 32,000 jobs, which was way short of what the economists had been forecasting. Also we’re expecting the ISM Services PMI to come in at 52.2, which is just a touch softer than the reading we got last time round, indicating that the overall economy is losing a bit of momentum.
The outcome of this jobs report is going to be critical as it could play a big role in shaping the near-term mood of dollar traders & the Federal Reserve are already facing some hard questions over what policy direction they should take next year.
Swiss Franc Awaits Inflation Signal
Back to Switzerland, it’s now all eyes on the Thursday CPI release which is expected to confirm that inflation remains flat at 0.0% year-on-year. With inflation being so low, the SNB has little reason to raise interest rates just yet, which keeps the Swiss Franc in neutral mode for now.
USD/CHF Technical Outlook: Triangle Near Resolution
Looking at it from a technical perspective USD/CHF is currently trading near $0.7940 still holding above a rising trendline that’s been built up since the end of December. The structure on the chart shows higher lows, reflecting a steady stream of buyers rather than a speculative frenzy.
The price is compressing in a symmetrical triangle, which is bounded by a rising trendline around $0.7905 & a declining resistance line roughly in the region of $0.7965 – $0.7980. The recent bar charts are showing small bodies & modest wicks, which are all signs of a period of consolidation. A breakthrough above $0.7965 would take us into $0.7987 & potentially $0.8007 – on the other hand if we see a drop below $0.7880 that would weaken the whole bullish structure.
RSI is looking neutral at the moment, suggesting the momentum is balanced and leaving plenty of room for it to move in either direction.
Trade idea: Buy on pullbacks around $0.7910, target $0.7985, stop-loss below $0.7880.
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