General analysis USDCHF for 08.06.2022
Current Dynamics
USD/CHF fell to 0.977, a local low of the last three weeks, amid a sharp rise in the U.S. dollar.
In expectation of such a dramatic development in the pair, investors attention was focused on the possible impact of higher inflation data on the monetary policy of the Swiss National Bank: the annual inflation rate in May reached 2.9%, the highest level for Switzerland in the last 14 years, significantly exceeding experts forecasts. This scenario corresponds to the expectations of Swiss National Bank board member Mahler, who promised a tightening of monetary policy in case of a deviation of waiting from the target of not more than 2%. The interest rate has remained unchanged for seven years and has been -0.75% the whole time.
Meanwhile, the latest Swiss unemployment data for May 2022 showed a 0.2% drop to 2.1% from the previous month, reaching pre-pandemic levels. The number of unemployed citizens fell by 6%. Even more impressive was the decline in the youth unemployment rate of 1.5%, the last time such a low percentage of unemployed young people in the national economy was seen at the beginning of the century.
On the other hand, the key driver of the sharp US dollar rally was a significant increase in the yield on ten-year government bonds, which reached a mark of 3%, near a local monthly high. The yield of treasuries is likely to keep its determining role on the greenback price dynamics in the nearest future because of the future because of the absence of any expected important macroeconomic releases.
At the same time, we should not underestimate the degree of influence on the price dynamics of the pair of the general geopolitical situation, which forms the traders attitude towards risk. At the moment, the widespread factor provoking the growth of inflation and causing the corresponding expectations of traders is the disruption of the global supply chain caused by the armed conflict in Ukraine, which, it seems, is not going to end in the near future. Such a course of the situation may well logically lead to a further consistent increase in the Fed key rate and, accordingly, the growth of the USD/CHF pair.
Among the key macroeconomic news, capable of influencing further movement of USD/CHF pair quotations, should be noted the data on consumer inflation in the USA, which will be released on Friday.
Support and resistance levels.
Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligators teeth (red line) is at 0.98040. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the gray area, showing a divergence, which is not a reliable signal to open a position.
- Support levels: 0.97340, 0.96960, 0.96550
- Resistance levels: 0.99080, 0.98560, 0.98040
Trading scenarios
- Short positions should be opened at the 0.97340 with a target of 0.96960 and a stop loss at 0.97600. Implementation period: 1-2 days.
- Long positions can be opened at the level of 0.98560 with a target of 0.99080 and a stop-loss at the level of 0.97600. Implementation period: 1-2 days.