On the daily chart below, we can see that the price got rejected from the 0.9118 resistance and it’s now pulling back towards the 0.9006 support where we can also find the red 21 moving average. May was a great month for the USD as strong economic data made the market to price in more rate hikes and price out the rate cuts expected by the end of the year.

However, as we reached peak hawkishness, some Fed members signalled the possibility of skipping the June hike to see more data and then decide whether to hike in July. Moreover, yesterday we got soft readings in the ISM Manufacturing PMI and Unit Labour Cost reports, which increased the unwind in USD longs. All of the above contributed to the recent weakness in USDCHF and if the data keeps on missing, we may see USDCHF at the lows pretty soon.

USDCHF Technical Analysis

USDCHF Technical Analysis
USDCHF Daily

On the 4 hour chart below, we can see that USDCHF is testing the upward trendline once again. This trendline has provided many entry points for the buyers in the past weeks, so we should see them defending this level again to position for another rally above the 0.9150 high.

If we do get a break lower though, the last line of defence will be the 0.9000 support as that’s where we find the daily 21 moving average. The sellers, on the other hand, will start to pile in more aggressively if the price breaks below the trendline and increase the bearish momentum if USDCHF eventually breaks the 0.9000 support.

USDCHF Technical Analysis
USDCHF 4 hour

On the 1 hour chart below, we can see more closely the current technical setup. We have 3 different entry points for the buyers:

  • More aggressive buyers may lean on this trendline with a defined risk just below it to target the break of the 0.9150 high.
  • Alternatively, they can lean on the last line of defence at the 0.9000 support.
  • More conservative buyers should wait for USDCHF to break above the downward trendline to pile in and extend the eventual rally to new highs.

The sellers, on the other hand, should pile in on every breakout:

  • If the price breaks below the upward trendline, the target will be the breakout of the 0.9000 support to eventually reach the lows.
  • If the price breaks below the 0.9000 support, then the sellers will increase the bearish momentum and we may see USDCHF back at the lows pretty quickly.
USDCHF Technical Analysis
USDCHF 1 hour

Today, all eyes will be on the US NFP report as different scenarios may unfold:

  • If the data exceeds expectations, accompanied by higher-than-anticipated average hourly earnings, it is likely to heighten the likelihood of a rate hike in June and potentially even factor in the possibility of a rate hike in July. This particular scenario may raise concerns in the market regarding a potential escalation of wages and ultimately prices.
  • Conversely, if the data is positive but falls short of expectations in terms of average hourly earnings, it is expected to further weaken the USD, as it would not significantly impact rate expectations and may even trigger soft landing vibes. The market will then focus on the forthcoming CPI report scheduled for next week.
  • Should the data fall short of expectations across all areas, it will be perceived as negative news and could potentially trigger risk aversion in the markets, leading to CHF strength. Moreover, based on recent comments made by Fed officials, we might also see USD weakness due to reduced expectations surrounding future interest rate hikes.