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USDCHF: USD in Anticipation of New Drivers for Movement

7/7/2022 1:22 PM

Current trend

During the Asian session, the USD/CHF pair is slightly decreasing after active growth at the beginning of the current trading week and is testing 0.9700 for a breakdown, retreating from the local highs of June 16, renewed yesterday.

The US dollar is correcting ahead of the publication of the ADP report on employment in the private sector and general data on the national labor market for June, which may slightly decrease, but in general, statistics should support the position of the national currency. Traders are reacting to yesterday's publication on business activity in the services sector from ISM, which fell sharply in June from 50.2 to 47.4 points, while analysts expected negative dynamics to only 49.8 points. The service sector's value slowed down from 55.9 to 55.3 points, which was significantly better than forecasts for a fall to 54.5 points. A similar indicator from S&P Global showed a moderate increase from 51.6 to 52.7 points. Investors also drew attention to the publication of the minutes of the last meeting of the US Federal Open Market Committee, according to which, in July, the regulator will raise the rate by 50 or 75 basis points. Also, the data reflected a deterioration in inflation forecasts in the short term and increasing risks in the labor market, where the agency expects a slowdown in growth and a further decline in business activity.

Swiss energy minister Simonetta Sommaruga said the country could face natural gas shortages next winter due to supply disruptions and sanctions imposed amid a Russian military operation in Ukraine. According to her, officials of the department have already prepared a plan to prevent possible shutdowns of almost 300K households with gas heating systems. The official also called the situation with the import of resources from neighboring Germany "unpredictable" and called for more active use of "green" energy to replace the gas import. The Swiss government has previously signaled its readiness to start rationing supplies of raw materials if other steps to ensure the supply of resources prove insufficient.

Support and resistance

On the daily chart, Bollinger bands reverse into a horizontal plane: the price range is expanding, letting the "bulls" renew local highs. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line), and is trying to consolidate above the zero line. Stochastic, having reached its highs, reverses a downward plane, signaling that USD may become overbought in the ultra-short term.

Resistance levels: 0.9700, 0.9762, 0.9847, 0.9900.

Support levels: 0.9618, 0.9520, 0.9459, 0.9400.

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