Current trend

The USD/CHF pair is actively losing value, trading around 0.8716, after the publication of macroeconomic statistics.

At the end of the second quarter, the Swiss economy once again demonstrated stability: the consumer price index (CPI) fell by 0.2% MoM, coinciding with the analysts' forecast, and fixed at 1.3% YoY, still remaining below similar indicators of 2.6% and 3.0% in the Eurozone and the US, respectively. Gross domestic product (GDP) growth rates also meet market experts' expectations: in the first quarter, it added 0.6% YoY, improving on preliminary estimates of 0.5%, and the leading economic indicators index from the Swiss Economic Institute (KOF), which takes into account 12 indicators related to consumer confidence, production, new orders, and the real estate market, and also reflects the development outlook for the next six months, was at 101.0 points in July compared to the forecast of 102.6 points, but is still above the key level of 100.0 points, confirming the favorable situation in the economy. Its smooth development, albeit at a slow pace, actively supports the position of the national currency.

In turn, the rapid decline of the USD/CHF pair from 0.8783 to 0.8716 was due to the publication of weak statistics the day before: the ISM Manufacturing PMI was 46.8 points, below the forecast of 48.8 points and the key level of 50.0 points, which is an indicator of development or regression in the sector, and the ISM employment index in the manufacturing sector fell to 43.3 points with preliminary calculations of analysts at 49.0 points. The GDPNow indicator from the Federal Reserve Bank of Atlanta, which estimates real GDP growth based on available economic data, in the third quarter was only 2.5% with a forecast and previous value of 2.8%, confirming the slow pace of development of the national economy.

Following the publication of these statistics, expectations regarding future interest rate adjustments in the US have changed significantly: market participants are almost 100.0% confident in a reduction in the rate at the September meeting, as indicated by the readings of the Chicago Mercantile Exchange (CME) FedWatch Tool, now assuming that the step may be significantly changed. If a day ago, 11.8% of market participants expected a reduction of 50 basis points, today this value is already 26.5%, but the maximum number (73.5%) is still confident in an adjustment of –25 basis points, which puts pressure on the positions of the US dollar.

Support and resistance

The long-term trend in the pair is downward. In mid-July, the support level of 0.8890 was broken, and during today's trading, quotes reached 0.8716; if it’s held, an upward correction will begin with a target of 0.8870. From this mark, it is worth considering new short positions.

As part of the medium-term downtrend, the instrument reached the target zone of 0.8746−0.8724 this week. Probably, the "bears" will try to break it down, and then the movement will intensify to zone 3 (0.8526−0.8504). The key resistance of the trend is shifting to the levels of 0.8960−0.8937, and if this is reached by the price as part of the correction, then one may consider short positions with the target at the minimum of the current week of 0.8715.

Resistance levels: 0.8870, 0.9020.

Support levels: 0.8716, 0.8565.

Trading tips

Short positions can be opened from the level of 0.8870 with the target of 0.8716 and stop-loss around 0.8916. Implementation period: 9−12 days.

Long positions can be opened above the level of 0.8916 with the target of 0.9020 and stop-loss around 0.8870.