USD/CHF Fails Below 0.7945 as Markets Wait for Critical US NFP Release and Swiss Inflation Surprises
USD/CHF currency pair is still capped below the 0.7945 level as markets wait for the much-awaited US Nonfarm Payrolls (NFP) report. Ongoing modest gains notwithstanding, the US Dollar continues to trade close to 14-year lows after a dismal ADP employment report, which strengthened speculations of near-term Federal Reserve rate cuts. Meanwhile, Switzerland’s Consumer Price Index (CPI) surprisingly went positive in June, mollifying deflation worries and providing some relief to the Swiss Franc. With the US economy forecast to create 110,000 jobs in June and unemployment expected to tick higher, today’s NFP report is likely to be instrumental in determining short-term USD direction and likely volatility. KEY LOOKOUTS • A softer-than-anticipated jobs reading would raise Fed rate cut bets, further weakening the USD. • A return to positive inflation in Switzerland will provide support to the CHF by cutting deflation risk. • A forecasted rise to 4.3% US unemployment could depress USD sentiment if it is confirmed. • Strong 3.9% annual wage growth may provide some support to the USD if other job data disappoints. USD/CHF currency pair is under sell pressure below the 0.7945 resistance mark as investors look for direction from the upcoming US Nonfarm Payrolls report. Though inching higher, the US Dollar is finding it difficult to bounce back from recent multi-year lows, under pressure from weak labor market readings and increasing hopes of Federal Reserve rate cuts. Meanwhile, the Swiss Franc has gained some ground following positive inflation in Switzerland during June, which helped alleviate deflation risks. Market participants are looking carefully at the NFP numbers, which are predicted to reflect a slowdown in employment growth and a slight increase in unemployment rates, something that could have a strong bearing on short-term USD/CHF trends. USD/CHF remains below 0.7945 while markets wait for the US NFP release for new direction. Swiss inflation returns to positive rates to support the CHF, while poor US labor data restricts Dollar upside. Bulls are wary of rising Fed rate cut hopes and volatility from NFP. • USD/CHF stays capped below 0.7945 in anticipation of the US Nonfarm Payrolls (NFP) release. • US Dollar is at multi-year lows, weighed down by dismal ADP jobs data. • Swiss Consumer Price Index climbed 0.1% YoY in June, reducing fears of deflation and bolstering the Franc. • 110,000 new US jobs are projected in June, lower than 139,000 in May. • US unemployment rate predicted to increase slightly to 4.3% from 4.2%. • Wages to stay steady at a 3.9% rate over the year. • NFP result may trigger a high degree of volatility, which will impact the expectations of Fed rate cuts and the USD sentiment. The USD/CHF currency pair is focusing investor attention before the US Nonfarm Payrolls release, as market sentiment continues to be bearish. The US Dollar has displayed modest strength in recent trading sessions, losing steam due to poor employment figures and growing rumors regarding Federal Reserve rate reductions. As the ADP report came in lower than expected, there are increasing concerns that the US labor market is not as resilient as thought, making today’s NFP release a pivotal event for influencing near-term expectations for monetary policy. USD/CHF DAILY PRICE CHART SOURCE: TradingView Concurrently, the Swiss economy provided a gentle shock in that inflation finally went positive in June when the Consumer Price Index increased by 0.1% year-on-year. This change helps temper previous deflation worries and provides some underlying basis for the Swiss Franc. Since both economies are showing disparate trends in data—US job markets weakening and Swiss inflation leveling out—investors are waiting anxiously for future numbers to gauge possible changes in economic trajectory and currency strength. TECHNICAL ANALYSIS USD/CHF is contained below the major resistance level of 0.7945, showing ongoing selling pressure close to recent highs. The pair keeps failing to support any significant recovery, with the overall trend still weighted on the downside as long as it holds below this level. A continued breakout above 0.7945 would potentially allow room for additional gains, but a failure to do so might leave the pair susceptible to fresh bearish momentum. Support levels to monitor are in the vicinity of the 0.7870–0.7850 range, which may find buyers if reached. FORECAST If the release of the next US Nonfarm Payrolls report comes in higher-than-expected—registering better job additions, declining unemployment, or better wage increases—the US Dollar may catch a bid, driving USD/CHF upwards. A move above the 0.7945 resistance level would be expected to break out the bull, perhaps setting the stage for the 0.8000 psychological level. Better labor market statistics would also dampen expectations for near-term Fed rate cuts, providing additional support for the Dollar in the short term. Conversely, if the NFP report establishes the weakness of the labor market, with diminishing job creation and growing unemployment, USD/CHF can face fresh selling pressure. A break below the 0.7870 support area would exacerbate losses further, provided it is accompanied by rising confidence in future Fed rate reductions. In this case, the pair may slide towards new multi-year lows, adding to the bearishness surrounding the US Dollar.
