Bottom line:  USDCHF medium term structure continues to remains bearish until prices stay below 0.9900 levels. It might have carved a triangle consolidation since 0.9500 lows on March 30, 2020. Bears are now looking to resume lower towards 0.9450 levels at least.

Fundamental Outlook:

USDCHF might remain under pressure as another round of dismal US Job data is expected to be released today at 0830 AM EST. The Non-Farm Payrolls are set to print -22million, while the Unemployment rate to drop to -16%. The US Dollar is set to remain under pressure against its counterparts.

More than 30 million Americans have lost their jobs in the past few weeks over the COVID-19 pandemic lockdown effect. Also, the IMF forecasts for US GDP in 2020 stands around -5.9%, along with an overall slump in the World GDP by around -3%, paints a gloomy picture.

GBPJPY may come under further pressure and drop towards 129.00 levels, after Bank of England keeps rates unchanged but warns of a severe slump in Q2 GDP and Unemployment rates. The GBPUSD exchange rate had also dropped to 1.2266 before pulling back.

The BoE projects Q2 GDP to further drop by over 25% and Unemployment to rise by 9%. Such figures have never been seen since the “Great Frost” in 1709.

Technical Analysis:

USDCHF might be back in control of bears as it prepares to resume lower towards 0.9450 levels at least. We can expect prices to drop as long as interim resistance at 0.9800 holds. After having consolidated between a tight range (0.9600 and 0.9800) for over 4 weeks now, USDCHF might be finally ready for a push lower.

Once it breaks below 0.9600 interim support and lower end of the trading range, we can expect further acceleration towards 0.9450 mark. Please note the 0.9450 is fibonacci 0.618 retracement of the rally between 0.9150 and 0.9900 levels. A bullish reversal around 0.9400/50 levels remains high probability.

Most traders might take this opportunity to initiate fresh short positions around current price (0.9720) with protective stops above 0.9900 and projected targets around 0.9450 respectively. We shall review again, when USDCHF hits 0.9400/50 levels.

Prepared by

Harsh Japee, Technical Analyst.

USDCHF Chart

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