Usdchf drops amid U.S. economic improvements and Swiss inflation fluctuations

USDCHF Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0%	0.4 Pips
Week to-date	-1.29%	-116.3 Pips
March	-1.29%	-116.3 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Nonfarm Payroll Employment
Fri 01:30 PM USD Average Hourly Earnings (12-mth)
Fri 05:30 PM USD Federal Reserve Chair Jerome Powell speech

What happened lately

In the United States, several key economic indicators have shown improvements that could influence the country’s economic outlook positively. The Nonfarm Business Labor Productivity increased to 1.5% in the fourth quarter from 1.2% in the previous quarter, indicating an increase in efficiency within the labor market. Moreover, Unit Labor Costs decreased to 2.2% compared to 3% in Q3, suggesting that businesses are experiencing a reduced pressure on wages despite increased productivity. Additionally, there is a notable drop in Initial Unemployment Insurance Claims, falling to 221,000 from 242,000, reflecting a strengthening labor market. Furthermore, new orders for manufactured goods witnessed a 1.7% increase in January from a revised decline of 0.6% in December, pointing to rising industrial activity and demand.

In Switzerland, inflation figures showed mixed signals. The monthly Swiss CPI Inflation Rate increased to 0.6% in February from -0.1% in January, signaling a rise in consumer prices over the month. However, the yearly CPI Inflation Rate decreased to 0.3% from the previous 0.4%, showing a broader annual inflation deceleration. These changes may reflect transient fluctuations in consumer prices and production costs.

Considering the USDCHF currency pair, the movement in recent economic data could have varying effects. Improvements in U.S. productivity and decreased labor costs, alongside a drop in unemployment claims, are indicative of robust economic health, which can bolster the U.S. dollar. Moreover, rising new orders for manufactured goods show an enhancement in industrial demand. Meanwhile, Swiss inflation data presents a complex picture, with short-term increases but long-term decreases potentially weakening the franc. Thus, taking these into account, the USD is likely to strengthen against the CHF if this trend continues, given the stronger U.S. economic performance relative to Switzerland. However, future shifts could occur based on upcoming U.S. economic announcements scheduled on Friday, including Nonfarm Payroll Employment, Average Hourly Earnings, and statements by Federal Reserve Chair Jerome Powell, which are pivotal in evaluating USDCHF movements.

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What can we expect from USDCHF today?

USDCHF on Thursday dropped 0% to 0.89090. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCHF looks mixed as the pair is likely to consolidate above 0.88937 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.89140 or trades above daily pivot 0.89039. Break above could target R1 at 0.89191. While to the downside, we are looking at 0.88937 (S1) and daily low of 0.88886 as support levels. USDCHF need to break on either side to indicate a short-term bias. A close below 0.88886 would indicate selling pressure.

For the week to-date, take note that USDCHF is bearish as the pair posted lower by -1.29%.

Key levels to watch out:

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