The USD/CHF currency pair has proven unusually resilient. It bounced off support around the 0.8200 handle, having recently dropped to a five week low of near 0.8185 in North American trading on Friday. The duo enticed players after last week’s dip. This drop resulted from the global economy and persistent confusion over U.S. tariff policy.
Last week USD/CHF saw some serious technical selling pressure. This came after its failed effort to move above the 20-day Exponential Moving Average (EMA) around the 0.8300 level. This pushback hasn’t been easy on the duo. The near 100% rally has encountered significant profit taking as it failed to maintain upward momentum after crossing this important technical barrier.
Analysts in the currency market think that if we were to re-conquer that psychological barrier of 0.8500 it would probably trigger additional upward movement. Such a recovery could aim for past tops of 0.8580 from April 10 and 0.8611 from April 8. Should USD/CHF strengthen not be able to hold on here and fall through important support, it could head down into the low of 0.8100 from 11-April. Moreover, there is a possibility of dropping even deeper to 0.8040, which was touched on April 21.
The market’s complexity deepens further with the behavior of the 14-day Relative Strength Index (RSI). Currently, it’s showing great effort not to fall below the 40.00 mark. A clear move under this level might trigger new bearish momentum for USD/CHF, suggesting growing selling pressure on the dollar among market participants.
Recent changes in USD/CHF are largely influenced by US economic news. This is particularly the case when it comes to President Donald Trump’s tariffs. On Wednesday, a separate U.S. lower court found that Trump misused the “national emergency” law. This unfortunate decision has cast a pall of uncertainty over the entire economic landscape and sharply rattled market confidence in the U.S. dollar.
Then on Thursday, the uncertainty deepened when a U.S. Appeals court issued a temporary stay on the international trade court’s ruling against Trump’s tariffs. This decision followed on the heels of an appeal filed by the administration. Investors have continued to stay skittish over these legal rulings. This uncertainty has led to volatility in the USD/CHF exchange rate as traders try to guess the ultimate impact of these moves on the overall economy.
New released data, both in price level indexes and inflation trends have painted a more positive picture for U.S. inflation. These trends are very important because they help drive the USD/CHF dynamic. The core Personal Consumption Expenditure (PCE) inflation rate rose at a 2.5% y/y clip. This increase is in line with market expectations. This is down from the last reading of 2.7%. It implies that inflationary pressures are cooling, a positive sign likely to inform Federal Reserve policies moving forward.
During North American trading hours, the PCE data for April suggested that inflationary pressures may be stabilizing, potentially affecting future decisions regarding interest rates and economic stimulus measures. Now that inflation is receding, the U.S. dollar appears to be benefiting from a change in mood among consumers and financial markets. The result is increased friction for trading between USD and CHF.