- USD/CHF declined for a third consecutive day to 0.87800, below the 20-day SMA of 0.8800.
- US JOLTs from July came in lower than expected, which fueled a decrease in US bond yields.
- Hawkish bets on the Fed for November remain high—markets pricing in rate cuts In June 2024.
On Tuesday, the USD faced selling pressure after releasing soft labour market figures from the US. American Treasury bond yields declined, making the USD struggle to find demand in FX markets. However, tightening expectations on the Federal Reserve (Fed) remain intact, which could limit the downside for the Greenback. No relevant will be released during the session on the CHF’s side.
The US reported weak labour market figures as the Job Openings and Labor Turnover Survey (JOLTS) decreased to 8.82 million. In contrast, the markets expected a reading of 9.465 million and decelerated from the last revised reading of 9.165 million. As a reaction, the US 2-year Treasury yield sharply decreased, more than 3% to 4.87%, as investors considered that the Federal Reserve would conduct its monetary policy decision “carefully” as stated by Jerome Powell at the Jackson Hole Symposium.
Focus now shifts to additional data released during the week, including ADP Employment Change and Nonfarm Payrolls from August, Gross Domestic Product (Q2) preliminary figures, and the Core Personal Consumption Expenditures (PCE) from July.
In the meantime, markets continue to bet on high chances of a 25 basis point hike by the Fed in November, which, according to the World Interest Rate Probabilities (WIRP) rose to nearly 70%. However, yields seem to be decreasing as markets adjusted their rate cuts expectations down to June from July.
USD/CHF Levels to watch
Analysing the daily chart, USD/CHF presents a bearish outlook for the short term. Both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) show a weak buying momentum, with the Relative Strength Index (RSI) positioned above its midline and showcasing a southward slope. Moving Average Convergence Divergence (MACD) also displays red bars, further supporting the intensifying softening of the bullish momentum. Plus, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, indicating that the bulls aren’t done yet and that the outlook is still positive for the short term.
Support levels: 0.8770, 0.8750, 0.8730.
Resistance levels: 0.87850 (20-day SMA), 0.8800, 0.8890 (100-day SMA).
USD/CHF Daily Chart