USD/CHF at Multi-Week Low, Breaching Key Supports Ahead of US Jobs Data

USD/CHF remains on the back foot, hitting a new multi-week low early Friday as markets await the release of the US jobs report for May.

The recent bearish move from 0.9158 (the lower top on May 24) has found solid support in the 0.8893/83 zone (200 DMA / 38.2% Fibonacci retracement of the 0.8332/0.9224 rally). This support zone has contained several attempts to break lower over the past few sessions, keeping the price in a consolidation phase for the fourth consecutive day.

Daily technical indicators are predominantly bearish, with strong negative momentum, price action below the thick daily cloud, and the daily Tenkan-sen/Kijun-sen in a bearish setup. However, oversold conditions and repeated failures to break clearly below the 0.8893/83 pivots raise questions about the near-term bearish outlook, suggesting a fresh signal is needed to define direction.

Today’s key economic event, the US labor data, is likely to provide that signal.

Economists expect the US economy to have added 185K new jobs in May, with the unemployment rate forecasted to remain unchanged at 3.9% and a slight increase in average earnings anticipated (0.3% in May vs. 0.2% in April). However, recent data showing softer-than-expected job openings in April and a significant drop in private sector payrolls in May are also being considered.

If May’s job numbers are softer than expected, it would support a dovish stance from the Fed and increase pressure on the dollar, likely resulting in a sustained break through the key 0.8893/83 support levels and opening the way for further retracement of the 0.8332/0.9224 rally.

Conversely, strong May job figures would provide fresh support to the greenback and generate an initial basing signal for USD/CHF.

Res: 0.8937; 0.9000; 0.9049; 0.9070
Sup: 0.8883; 0.8838; 0.8778; 0.8729