Sell Stop 0.9730. Stop-Loss 0.9760. Targets 0.9705, 0.9635, 0.9580, 0.9520
Buy Stop 0.9780. Stop-Loss 0.9740. Targets 0.9820, 0.9910, 0.9950
USD / CHF has strayed in early August by the lower line of the rising channel on the daily chart near the level of 0.9635 and reached at the end of last week, the resistance level 0.9820 (38.2% Fibonacci level of the correction to the last wave of the global decline in December 2015 and at the level of 1.0300) . However, further growth of the pair was stopped on productivity weak data in the US in the second quarter, published on Tuesday.
The pair USD / CHF fell finding support near the level of 0.9770 (EMA200, EMA144, EMA50 daily chart, EMA50 on the weekly chart), which is a kind of a balance line. At this level the pair USD / CHF returns regularly since mid-February. Zone near the levels of 0.9770, 0.9705 (23.6% Fibonacci level) is also a mid-range between the levels of 0.9950, 0.9520, where the pair USD / CHF is trading around March.
If a positive US dollar trend will continue in the currency market, there is a high probability that the resistance level of 0.9820 is still broken and the pair USD / CHF will go to the levels of 0.9910, 0.9950 in the rising channel on the daily chart.
The signal for this scenario will be the consolidation of the pair above the 0.9770 level.
Indicators OsMA and Stochastic on the 4 hour chart are deployed on long positions.
On the other, the older slots, indicators show a mixed trend.
The reverse scenario is connected with the return of the pair USD / CHF drops below support level 0.9705 towards the rising channel's lower border near 0.9635 level. More preferably still look long positions.
Support levels: 0.9705, 0.9635, 0.9580, 0.9520
Resistance levels: 0.9770, 0.9820, 0.9910, 0.9950, 1.0000
Overview and Dynamics
According to previously submitted data for the week, consumer prices fell 0.4% in July compared with the previous month and by 0.2% compared with the same period last year. Real retail sales in Switzerland in July fell by 3.9% in annual terms.
The labor market in this country is in good condition, and the unemployment rate remained stable near the level of 3.3% (this data for July were presented on Tuesday), remaining one of the lowest in Europe and worldwide.
National Bank of Switzerland is traditionally in favor of a low exchange rate of the Swiss franc, considering it too high. At the same time the SNB reserves the right, if necessary, to intervene in trading on the foreign exchange market with franc sales to bring down the excessive demand for it.
On carrying out foreign exchange intervention the SNB, while never notify, either before or after the intervention carried out. It certainly hinders market participants from aggressive purchases of the franc.
Despite the strong labor market data in the United States, published last Friday, weak data on GDP and productivity in the US in Q2 significantly reduce the likelihood of higher interest rates in the US in the coming months.
Thus, according to futures on interest rates, the probability of a rate hike in September is 12%, against 15% the previous day and 18% on Friday.
More than likely seems an increase in US interest rates in December by 0.25%.
On the other hand, there is a steady trend of monetary easing by other major world central banks. So, yesterday the RBNZ cut its stake in New Zealand by 0.25% to 2.0% and signaled the possibility of further easing of monetary policy.
It is likely that before the end of August the strong position of the US dollar in the foreign exchange market, including in the pair USD / CHF will remain, despite the low probability of increasing rates in the US in September. And when you receive a positive US macroeconomic data, long positions in the US dollar will gain momentum towards the end of the year.