- USD/CHF falls further to near 0.8400 as the US Dollar weakens ahead of the US NFP.
- Risk-averse market sentiment has improved the Swiss Franc’s safe-haven appeal.
- The Fed is widely anticipated to start reducing interest rates this month.
The USD/CHF pair falls to near the round-level support of 0.8400 in Friday’s European session. The losing streak of the Swiss Franc asset has extended for the fourth trading session amid sheer weakness in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, refreshes its weekly low below 101.00 amid growing risks to the United States (US) labor market health.
Market sentiment remains risk-averse ahead of the US Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT. The Risk-averse profile has improved the safe-haven appeal of the Swiss Franc (CHF).
Investors keenly await the US NFP data as it will influence the likely size of the interest rate cut by the Federal Reserve (Fed) in its monetary policy meeting this month. Economists estimate that US employers hired 160K new workers in August, higher from 114K in July. In the same period, the Unemployment Rate is expected to have declined to 4.2% from the former release of 4.3%.
Meanwhile, the Swiss National Bank (SNB) is expected to cut interest rates again this month as inflationary pressures in the Swiss region continue to decline. Swiss annual Consumer Price Index (CPI) decelerated at a faster-than-expected pace to 1.1% from the estimates of 1.2% and the former release of 1.3%.
USD/CHF declines toward the horizontal support plotted from 28 December 2023 low of 0.8333 on a daily timeframe. Near-term and broader-term outlook of the Swiss Franc asset remain bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.
The 14-day Relative Strength Index (RSI) oscillates in the bearish range of 20.00-40.00, suggesting that a strong bearish momentum is intact.
More downside would appear if the asset breaks below the round-level support of 0.8400, which would drag the major towards the 28 December 2023 low of 0.8333 and round-level support of 0.8300.
On the flip side, a recovery move above the weekly high near 0.8540 will drive the asset toward the round-level resistance of 0.8600, followed by the August 20 high of 0.8632.
USD/CHF daily chart
Economic Indicator
Unemployment Rate
The Unemployment Rate, released by the US Bureau of Labor Statistics (BLS), is the percentage of the total civilian labor force that is not in paid employment but is actively seeking employment. The rate is usually higher in recessionary economies compared to economies that are growing. Generally, a decrease in the Unemployment Rate is seen as bullish for the US Dollar (USD), while an increase is seen as bearish. That said, the number by itself usually can't determine the direction of the next market move, as this will also depend on the headline Nonfarm Payroll reading, and the other data in the BLS report.
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