Good day forex peeps! Here’s an update on the USDCHF which I published back on June 21 (kindly check my previous post here). As you can see from its chart, the pair has continued to drop and has even slipped past the 61.8% Fibonacci retracement level that I drew. Now, the only obvious support that is preventing it from declining further is the neckline of the former inverted head and shoulders pattern. With the stochastics in the oversold region, the US dollar could soon again take the driver seat away from the Swiss franc. Though, it is also possible that the pair would trade sideways for awhile before moving higher. Once it does, it could aim for its recent high at 1.1731. On the negative side, if and when the 1.0800 support and the former neckline give way, the Swissy could further trump the greenback and the pair could fall and revisit its previous low at 1.0435.
On the fundamental side, the Swissy’s gain was mostly due when the Swiss National Bank stated that the risk of deflation in the country is fading away. The bank’s statements then sparked some speculations that it would refrain from meddling in the market to purposely weaken the CHF.
For this week, though, the market will focus on the release of the grand daddy of economic reports, the US’s NFP report. For the month of June, US firms are sen to have slashed about 103,000. This marks the first job decline in the Us four months. Such drop would reflect to an uptick in the country’s unemployment rate to 9.8% from 9.7%. Now, consumption takes up about 70% of the US total output. With declining jobs, naturally, the people’s aggregate spending would dip as well because of their lesser total income. This scenario could then fuel some risk aversion in the markets, which could consequently lead to an increase in the safer assets like the USD.