USD/CHF Touches Off 0.9000 After US Data; Fails to Hold this Level

The USD/CHF surged initially after the US Core PCE Price Index had its highest annualized increase in 27 years, notching up 3.1% (consensus of 2.9% and up from 1.9% in March). However, it has shed some of these gains, even as MUFG bank argues that there is no significant backing for the greenback’s strength.

MUFG bases its analysis on April’s jobs data, reinforcing the Fed’s lower for longer stance on the near-zero interest rate policy.

MUFG would like to see the jobs data for May, which comes up next week, for more explicit direction on the USD, stating that the jobs data has become a more critical metric on which to hinge any rate Fed rate hike expectations. 

So far, the response of the greenback (shedding a lot of today’s gains as of 1700 UTC) and the muted higher open for the US indices seems to suggest that investors are indeed waiting on May’s NFP for broad-based direction.

The USD/CHF is still up on the day but has shed more than 50% of its immediate post-data gains.

Technical Levels to Watch

The active daily candle’s surge stopped just short of the 0.90351 resistance and has retraced to the violated resistance at 0.89953.

A bounce and a 3% penetration close above this level set up another opportunity to retest 0.90351. If the price surpasses this level, we could see 0.90809 and 0.91000 come into the mix, with additional resistance seen at 0.91361. This is the completion point of the measured move from the break of the falling wedge.

On the flip side, a close below 0.89953 preserves this resistance. This scenario could allow for a pullback that targets 0.89505, with 0.89227 and 0.89000 serving as additional targets to the south.

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USD/CHF Daily Chart

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