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USD/CHF Likely To Struggle Near 0.9940

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Technical analysis of Forex market

Key Highlights

  • The US Dollar started a fresh increase from 0.9849 against the Swiss Franc.
  • A significant bearish trend line is forming with resistance near 0.9940 on the 4-hours chart of USD/CHF.
  • The US Services PMI in Oct 2019 declined from 51.0 to 50.6.
  • The US Nonfarm Productivity could rise 0.9% in Q3 2019 (Prelim), down from the last 2.3%.

USD/CHF Technical Analysis

After a sharp decline, the US Dollar found support near the 0.9840-0.9850 area against the Swiss Franc. USD/CHF started a fresh increase above 0.9875, but the pair is facing many resistances on the upside.

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Looking at the 4-hours chart, the pair recovered above the 0.9900 resistance area. Moreover, there was a break above the 50% Fib retracement level of the last decline from the 0.9970 high to 0.9849 low.

However, the pair is facing a lot of hurdles on the upside near 0.9925 and 0.9940. More importantly, there is significant bearish trend line forming with resistance near 0.9940 on the same chart.

The 76.4% Fib retracement level of the last decline from the 0.9970 high to 0.9849 low is also near the trend line. Therefore, an upside break above the 0.9940 resistance won’t be easy.

If there is a clear break above 0.9940, the pair could climb towards 0.9980 and 1.0000. If not, the pair might start another decline towards the 0.9850 support area.

Fundamentally, the US Services PMI for Oct 2019 was released by the Markit Economics. The market was looking for no change in the PMI from 51.0.

However, the actual result was below the market forecast, as the US Services PMI declined from 51.0 to 50.6 in Oct 2019, marking slowest rise in business activity since February 2016.

The report added:

U.S. service providers reported a further slowdown in business activity growth in October, as new business stagnated and export demand dropped further.

Overall, USD/CHF is likely to struggle near 0.9940. Besides, GBP/USD remained well bid above 1.2860 and EUR/USD corrected below the 1.1100 support.

Upcoming Economic Releases

  • Germany’s Services PMI for Oct 2019 – Forecast 52.5, versus 51.2 previous.
  • Spanish Services PMI for Oct 2019 – Forecast 52.8, versus 53.3 previous.
  • Euro Zone Composite PMI Oct 2019 – Forecast 50.2, versus 50.2 previous.
  • US Nonfarm Productivity Q3 2019 (Prelim) – Forecast +0.9%, versus +2.3% previous.