USDCHF Analysis
| Week Ending 2024-08-02 | |||
| Open | High | Low | Close |
| 0.89 | 0.89 | 0.86 | 0.86 |
| Performance | |||||
| Period | Pct | Chg | Momentum | ||
| Friday | -1.65% | -143.5 Pips |  |
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| Week 2024-08-02 | -3.01% | -265.8 Pips | |
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| August | -2.33% | -204.2 Pips | |
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Upcoming key events for the new week (London Time)
Thu 01:30 PM Initial Unemployment Insurance Claims
What happened over the week
The U.S. economic indicators showcased a mixed picture with several signs of a slowdown. Factory orders in June dropped significantly by -3.3%, a substantial decline from May’s figure of -0.5% (Census Bureau). Average hourly earnings growth in July slowed to 0.2%, down from 0.3% in June, coupled with a substantial decrease in nonfarm payroll employment for July to 114,000 from June’s revised figure of 179,000 (Bureau of Labor Statistics). Additionally, the Q2 flash estimate for unit labor costs drastically decreased to 0.9% from 4% in Q1, while nonfarm business labor productivity grew to 2.3% in Q2 from 0.2% in Q1 (Bureau of Labor Statistics). Initial unemployment insurance claims for the week ending 27 July increased to 249,000 from 235,000 (Department of Labor). The Federal Reserve kept interest rates steady at 5.5%, indicating a cautious approach amidst these economic conditions (Federal Reserve). The Employment Cost Index in Q2 also showed a decline to 0.9% from 1.2% in Q1 (Bureau of Labor Statistics), and the Job Openings and Labor Turnover Survey (JOLTS) in June were slightly down to 8.184 million from the revised 8.23 million in May (Bureau of Labor Statistics). Finally, the House Price Index (1-mth) in May remained unchanged at 0% following a revised 0.3% in April (FHFA).
In Switzerland, the inflation indicators were relatively stable yet showed some signs of deflationary pressure. The monthly CPI inflation rate in July dropped to -0.2% from 0% in June, while the annual CPI inflation rate remained at 1.3% for July compared to June (Federal Statistical Office). However, the ZEW Survey – Expectations in July saw a significant drop to 9.4 points from 17.5 points in June, indicating a decline in economic sentiment (ZEW).
The recent economic data suggests a broad trend of weakening in the U.S. economy, with declining factory orders, slower wage growth, fewer job openings, and higher initial claims for unemployment benefits. This economic deceleration likely contributes to a bearish outlook for the U.S. dollar. Conversely, Switzerland shows relative economic stability, albeit with some deflationary pressures and a decline in economic sentiment. Given these indicators, the USDCHF pair is likely to face downward pressure as the weakening U.S. economic outlook diminishes investor confidence in the dollar, driving movement towards the more stable Swiss franc. This trend is reflected in the recent drop of USDCHF by -1.65% to 0.85772 and a notable week-long decline of -3.01% for the period ending 2024-08-02.
From X (Twitter)
Consumer prices fell by 0.2% in July #statistics https://t.co/mX8NW3xysx pic.twitter.com/NDOV16U4rP
— Swiss Statistics (@swissstatistics) August 2, 2024
What can we expect from USDCHF for the new week and what happened on Friday?
USDCHF on Friday dropped -1.65% to 0.86. Price is below 9-Day EMA while Stochastic is falling. For the week ending 2024-08-02, the pair dropped -3.01% or -265.8 pips lower.
Looking ahead, USDCHF looks bearish as the pair posted lower in Friday trading session.
For the new week, our technical outlook looks bearish, immediate support level is at 0.85 (WS1) with break below could see further selling pressure towards 0.84 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 0.89 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 0.86 would indicate selling pressure.
For the month of August, USDCHF is down by -2.33% or -204.2 pips lower.
Weekly key levels to watch out:
| R3 | 0.91 |
| R2 | 0.90 |
| R1 | 0.88 |
| Weekly Pivot | 0.87 |
| S1 | 0.85 |
| S2 | 0.84 |
| S3 | 0.82 |
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