A Fresh Downside Leg Looms as USDCHF Tests Key Moving Averages

Forex

Economic

Summary:

If the price manages a decisive close below the 100-period moving average, we could see a new bearish leg develop, targeting the local support zone at 0.7921.

SELL USDCHF

EXP

PENDING

0.80700

Entry Price

0.79220

0.81300

0.80504 0.00000 0.00%

Pips

PENDING

0.79220

Exit Price

0.80700

Entry Price

0.81300

The latest economic data from the United States offered mixed signals regarding the evolution of activity and the labor market. While the services sector continued to expand during June, the pace of growth showed some moderation, reinforcing the perception of an economy advancing at a more balanced stride after several months of strength.

The ISM Services Purchasing Managers' Index (PMI) landed at 54 points in June, slightly below the previous reading of 54.5, though matching market expectations. Despite the slowdown, the indicator remained comfortably above the 50-point threshold that separates economic expansion from contraction.

Details of the report reflected a favorable trend in some key components. The employment index advanced from 47.9 to 51.2, returning to expansionary territory and suggesting an improvement in hiring conditions within the sector. On the other side, the prices index descended from 71.3 to 67.7, signaling a moderation of inflationary pressures that could ease some of the Federal Reserve's concerns regarding the persistence of inflation in services.

On the monetary front, Federal Reserve Governor Christopher Waller highlighted the importance of forward guidance as an economic policy tool. During a conference organized by the Bank of Italy in Rome, Waller noted that this mechanism can increase the effectiveness of monetary policy when used appropriately, as it helps guide market expectations. However, he also warned that overly rigid communication could limit policymakers' ability to react to unexpected changes in economic conditions.

Meanwhile, the labor market showed signs of cooling. The Non-Farm Payrolls (NFP) report revealed the creation of just 57,000 jobs during the last month, a figure considerably lower than analysts' forecasts, which had expected an increase of 110,000 positions. The result suggests a slowdown in hiring and could be interpreted as a sign that high interest rates are beginning to exert a greater influence on economic activity.

According to the CME FedWatch Tool, the probability that the Federal Reserve will implement at least one additional rate hike before the end of September fell to 53.2%, down from the 59.4% registered a week ago, reflecting a lower conviction in the market regarding the need for further monetary tightening in the short term.

Meanwhile, in Switzerland, the latest inflation data similarly pointed to more moderate price dynamics than anticipated. The Consumer Price Index (CPI) increased by 0.2% monthly in May, below the market consensus of 0.3%, while the annual rate held steady at 0.6%, missing expectations that anticipated an advance to 0.8%.

This contained behavior of inflation has allowed the Swiss National Bank (SNB) to maintain its monetary stance unchanged. Its President, Martin Schlegel, noted on Thursday that there is currently no need to modify interest rates, emphasizing that inflation within the 0% to 2% range remains fully compatible with the institution's price stability objective.

Nevertheless, monetary authorities continue to look favorably upon a further depreciation of the Swiss franc. Although the currency has accumulated a drop of nearly 4% against the U.S. dollar so far this month, SNB policymakers believe a weaker exchange rate would help support inflation and economic activity. Along those lines, central bank member Petra Tschudin stated that medium-term inflation outlooks remain virtually unchanged and reiterated that the institution stands ready to intervene in the foreign exchange market if conditions require it. A Fresh Downside Leg Looms as USDCHF Tests Key Moving Averages_1

A Fresh Downside Leg Looms as USDCHF Tests Key Moving Averages_1

Technical Analysis

USDCHF has initiated a corrective move downward, having recently hit a local peak on June 24 when it reached the 0.8139 level. From this zone, the price was rejected lower until touching the 0.8011 level, while finding a bit of support at the 100-period moving average located at 0.8048. Meanwhile, the 200-period moving average sits at 0.7971. If the price manages a decisive close below the 100-period moving average, we could see a new bearish leg develop, targeting the local support zone at 0.7921.

Looking at the oscillators, the RSI recently reached the 53 level, an area that coincides with resistance levels on both the RSI and the price chart when it tested the 0.8070 resistance. Consequently, from a technical perspective, the price could resume its downward path from this level. Meanwhile, the MACD shows a bullish histogram that is beginning to lose depth, while the signal lines remain deeply embedded in negative territory. As a result, downside impulses continue to be favored.

Trading Recommendations

Trading direction: Sell

Entry price: 0.8070

Target price: 0.7922

Stop loss: 0.8130

Validity: Jul 17, 2026 15:00:00

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A Fresh Downside Leg Looms as USDCHF Tests Key Moving Averages

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