Current trend

Amid the negative dynamics of the American dollar and positive Swiss macroeconomic statistics, the USD/CHF pair is trading within a correction trend at 0.8510.

In July, the consumer price index fell by 0.2% to 107.5 points, while relative to the same period a year earlier, inflation was 1.3%, remaining within the target range of the Swiss National Bank of 1.0–2.0%. The negative dynamics are due to cheaper international travel, clothing, and footwear, but the cost of housing, fruits, and vegetables has increased. The indicators allow the regulator officials to change the recent aggressive “hawkish” policy and think about returning interest rates to the usual levels close to zero.

The American dollar corrected from 104.00 to 102.40 in USDX over two trading sessions after the publication of the labor market report. The July unemployment rate increased from 4.1% to 4.3% amid a slowdown in the nonfarm payrolls 179.0K to 114.0K, while private nonfarm payrolls were 97.0K, below 136.0K a month earlier. In addition, the average hourly earnings changed from 0.3% to 0.2%, meeting expectations and putting pressure on the US currency.

Support and resistance

On the daily chart, the trading instrument retreats from the support line of the downward channel 0.8920–0.8670. Technical indicators keep a stable sell signal: fast EMA on the Alligator indicator are moving away from the signal line, and the AO histogram is forming correction bars in the sell zone.

Resistance levels: 0.8520, 0.8700.

Support levels: 0.8480, 0.8330.

Trading tips

Short positions may be opened after the price declines and consolidates below 0.8480, with the target at 0.8330. Stop loss is 0.8550. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 0.8520, with the target at 0.8700. Stop loss is around 0.8460.