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USD/CHF: Commerzbank Predicts Potential 200-Pip Drop If 0.8911 Breaks Down


The USD/CHF is trading lower for the fourth straight day, following a continuation of the bearish sentiment that has permeated the US Dollar for several weeks now. 

The latest consignment of weakness was fueled by the weak employment report of Friday, which saw the unemployment rate in the US climb from 6.0% to 6.1%, along with an underwhelming addition of jobs.

Commerzbank’s Head of FICC Technical Analysis Research, Karen Jones, sees the pair slumping towards the 0.8780 January 2021 low in the latest analysis report released by the bank.

Commerzbank cites the 200-day moving average at 0.9084 as the nearby resistance, with a potential capping of any retracement rallies at 0.9125 to be the trigger for a selloff that targets 0.8911. This support level is the only barrier holding the pair from hitting the 0.8872 mid-February low first, then the January low at 0.8780.

If this analysis plays out as projected, the USD/CHF still has some downside left in the pair but would likely experience a retracement rally to a cheaper selling point before the bears come in once more.

Technical Outlook for USDCHF

The decline in the USD/CHF is now challenging support at 0.89953. A breakdown of this support allows the pair to dash towards the 0.89500 psychological support (23 February low), with 0.89144 and 0.88317 coming into the picture if the decline is more extensive. 

On the other hand, a corrective retracement to the upside could follow from a bounce on 0.89953. This move would target 0.90351 initially, with 0.90809 and 0,91361 serving as potential upside targets. 0.91899 and 0.92264 follow in sequence, with a break of the latter indicating a bullish reversal for the pair. 

USD/CHF Daily Chart

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