USDCHF growing trend has resisted the attack of sellers

05 June 2023 177
USDCHF growing trend has resisted the attack of sellers

The USDCHF currency pair was under a strong pressure of sellers at the end of last week. In some moments of Friday's trading session the quotes almost reached the level of 0.903, but later the "bulls" leveled all the dollar drawdown against the franc. The uptrend from the lows of early May confirmed its strength, and in case of consolidation above 0.913 it will be possible to reach the level of 0.92.

 

Friday's high volatility was due to the publication of the U.S. labor market data for May. The indicators reflected a mixed picture. The unemployment rate rose more than expected (from 3.4% to 3.7%), but at the same time the number of new vacancies exceeded forecasts (339,000 against expectations of 180,000). As a result, the positive and negative surprises offset each other, and market participants continue to believe in the unchanged monetary policy at the June 14 Fed meeting.

 

In turn, the franc faced increased pressure today after the publication of inflation statistics in Switzerland. The pace of price growth slowed sharply from 2.6% to 2.2% on a year-on-year basis. Such figures clearly suggest that economic growth is fading, especially considering last week's negative data on retail sales and the trade balance.

 

Such macroeconomic statistics cause concerns about the actions of the Swiss National Bank at the June meeting. Last week, Chairman Thomas Jordan said that there were high risks of inflation and the possibility of additional interest rate increases. Since the Swiss regulator holds meetings only 4 times a year, it may really tighten the policy one more time on June 22. However, it is highly likely that such a move will be the last in the current monetary cycle, as the situation may change radically by September.

 

The USDCHF uptrend is developing quite smoothly, therefore even after one month of growth the technical indicators are still far from the overbought zone. Now it is important to watch the level of 0.913, the overcoming of which can lead to an acceleration of the rise towards the level of 0.92.

 

 

The following trading strategy option can be suggested:

 

Buy the USDCHF on consolidation above the level of 0.913. Take profit – 0.92. Stop loss – 0.907.

This content is for informational purposes only and is not intended to be investing advice.

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