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USDCHF Upward Dynamics from the Support Level 0.9375

12/6/2022 1:49 PM

After unsuccessful attempts to break the support level of 0.9375, the USD/CHF pair is recovering its position, moving towards 0.9550.

The strengthening of the US dollar is associated with yesterday's positive statistics: the index of purchasing managers for the non-manufacturing sector from the Institute of Supply Management (ISM) reached 56.5 points in November, which was higher than the forecast of 53.3 points, and the previous value of 54.4, and Service PMI was slightly better than expected at 46.1 points and amounted to 46.2 points. The volume of industrial orders in October was corrected by 1.0% MoM, despite preliminary estimates of 0.7%, and the previous value reached 0.3%. Thus, the US economy is showing positive indicators, which allows the US Federal Reserve to continue tightening monetary policy.

The franc is in a vulnerable position: the gross domestic product (GDP), released last week, was worse than analysts' expectations, rising only 0.5%, below the forecast of 1.0%, and the previous value corrected from 2.4% to 2.2%. The indicator increased by 0.2% QoQ, which is also less than the expected increase of 0.3%, and the previous value changed from 0.3% to 0.1%. The Swiss Institute of Economics (KOF) Leading Economics Index for November was 89.5, although it was forecast at 91.3, while's PMI was at 53.9, below the forecast of 54.0 points and 54.9 points earlier. In total, almost all macroeconomic statistics over the past two weeks have not lived up to experts' expectations, indicating that the country's economy is not developing at the expected pace, and as a result, the Swiss currency is losing its position.

The long-term trend is downward, and within it, the "bears" renewed November's low at 0.9375, at which the negative dynamics stopped, and the price began an upward correction to 0.9550. If it holds, the decline will continue to the December low of 0.9330.

The medium-term trend is downward, with the target around zone 3 (0.9260–0.9229), but there is an upward correction at the moment. The key resistance of the range is at 0.9683–0.9650, and after it is reached within the correction, short positions with the target at last week's low of 0.9330 may be opened.

Resistance levels: 0.9550, 0.9600. | Support levels: 0.9375, 0.9205, 0.9155.

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