Resistance Turned Support Points to a Bullish Continuation

Central Bank

Economic

Summary:

This price retest of a resistance level now converted into support is widely seen as a bullish signal, especially since it is accompanied by an immediate upward reaction after touching the zone.

BUY USDCHF

EXP

TRADING

0.78958

Entry Price

0.80060

0.78400

0.78927 -0.00022 -0.03%

0.0

Pips

Flat

0.78400

Exit Price

0.78958

Entry Price

0.80060

The latest data from the U.S. labor market showed a larger-than-expected deterioration. Initial jobless claims for the week ending May 30 rose to 225,000, coming in above both the 213,000 projected by the market and the 212,000 reported during the previous week. In the same manner, the four-week moving average increased to 214,750 claims from the previous 208,250, pointing to a gradual moderation in overall employment conditions. Along the same line, job cuts announced by Challenger, Gray & Christmas rose from 83,387 to 97,006 in May, with the technology sector making up about 39% of the layoffs, which represents a 16% increase compared to the prior month.

Despite these signs of cooling in the employment market, activity in the services sector continued to display steady strength. The ISM Services Index rose from 53.6 to 54.5 in May, pushed higher by companies that accelerated their product orders because they expect higher costs in the near future. At the same time, the Prices Paid sub-index increased from 70.7 to 71.3, indicating that the recent rise in energy prices is starting to filter into the wider services economy. Within this environment, New York Fed President John Williams repeated that monetary policy sits in an appropriate spot, stating that he currently sees no convincing argument to change interest rates in either direction.

On his part, Kansas City Fed President Jeffrey Schmid warned that inflation remains the main risk for the U.S. economy, leaving open the possibility that the Fed might need to keep its restrictive stance for longer or even tighten it further if necessary to ensure price stability. Speaking at the Kansas City Fed Economic Forum, Schmid noted that recent indicators continue to describe a resilient economy. Meanwhile, San Francisco Fed President Mary Daly pointed out that artificial intelligence is not creating significant inflationary pressures either upward or downward, and maintained that monetary policy is currently in an appropriate position. In the fixed-income market, U.S. Treasury yields saw minor declines. The 10-year benchmark note fell three basis points to 4.463%, even though optimism regarding a possible solution to the Middle East conflict faded over recent days.

In Switzerland, consumer price data disappointed the market. The Consumer Price Index grew by just 0.2% month-over-month in May, missing the 0.3% expected forecast, while the annual inflation rate remained stuck at 0.6%, landing well below the market consensus of 0.8%. For the Swiss National Bank (SNB), which has been trying to prevent an excessive appreciation of the franc in a low-inflation environment, these numbers should have helped lower the demand for the currency. However, exactly the opposite occurred.

The persistent strength of the Swiss franc continues to be a main challenge for the SNB. With its benchmark interest rate set at 0% and inflation tracking near minimum levels, the institution has made it clear that it prefers to intervene in the foreign exchange market rather than return to negative interest rates. The weak inflation data published on Thursday added weight to the arguments for a more flexible monetary policy ahead of the June meeting and even brought back the possibility of negative rates. Nevertheless, investors looked past these signals and continued to build up positions in Swiss francs. In practice, the market actively went against the central bank's stance, pushing up a currency that keeps gaining value despite the efforts of officials to curb its strength, on a day when the fundamentals seemed to point in the opposite direction. Resistance Turned Support Points to a Bullish Continuation_1

Resistance Turned Support Points to a Bullish Continuation_1

Technical Analysis

From a chart perspective, USD/CHF is starting to break upward after a clear period of accumulation. During this session, we saw a temporary wave of strength in the Swiss franc that pushed the price down to touch the current support level at 0.7875, which previously functioned as a horizontal resistance ceiling. This price retest of a resistance level now converted into support is widely seen as a bullish signal, especially since it is accompanied by an immediate upward reaction after touching the zone. Furthermore, the 100 and 200-period Moving Averages are following right behind the price action, currently running at 0.7858 and 0.7842, respectively. These moving lines add solid structural factors for the upward movement to continue toward the psychological 0.8000 level, which also marks the next key resistance target hit on April 7.

A look at the oscillator section provides further confirmation for this upside path. The Relative Strength Index (RSI) is currently tracking at the 56 level after previously entering overbought territory near 75. Although the downward price pullback was small, the RSI dropped quite a bit, showing that the short-term downward pressure is clearing out quickly.

At the same time, the MACD indicator shows a shallow histogram that is hinting at a possible downward crossover, reflecting the minor pullback that just occurred. However, because the signal lines are running well above the neutral zero zone, it shows that the overall chart bias is already bullish. This setup suggests that the path of least resistance points toward a continuation of the upward leg, keeping the active trend-following setup intact.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7893

Target price: 0.8006

Stop loss: 0.7840

Validity: Jun 16, 2026 15:00:00

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Resistance Turned Support Points to a Bullish Continuation

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