USD/CHF Price Analysis: Upbeat US Data Raises Recession Doubts

• The US reported stronger-than-expected services data.
• There is a 75% chance of a 75bps rate hike from the FED.
• Upbeat US data has shown the economy might not be in recession.

Today’s USD/CHF price analysis is bullish as the US economy continues to impress. Stronger-than-expected services data overnight strengthened the argument for rate hikes, and markets are now pricing in a 75% chance that the Fed will raise rates by 75 basis points this month.

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For the second consecutive month, the US services sector expanded on higher employment and order growth in August as supply constraints, and price pressures subsided. This report strengthened the argument that the economy was not in a recession despite declining output in the year’s first half.

According to the Institute for Supply Management, the non-manufacturing PMI increased marginally from 56.7 in July to 56.9 last month, marking the second consecutive month of growth following three falls.

Reuters economists predicted that the non-manufacturing PMI would fall to 54.9. A reading above 50 denotes growth in the services sector, which accounts for more than two-thirds of all economic activity in the United States.

The expansion in the service sector came after the ISM’s manufacturing survey on Thursday, which also revealed that factory activity in the United States increased steadily in November. It defies the trend in other major economies and adds to the evidence that the economy was not in recession even though its GDP decreased in its first half.

This data gave the dollar yet another reason to push higher. USD/CHF is moving closer to parity and might get there if the dollar rally continues.

USD/CHF key events today

Investors expect the United States trade balance report later today. The Trade Balance calculates the value difference between goods and services imported and exported during the reporting period.

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USD/CHF technical price analysis: Bulls weak at 0.98550 resistance

The 4-hour chart shows bulls unable to break above 0.98550. The price is trading above the 30-SMA and RSI above 50, showing bulls are in control.

However, the RSI is showing a bearish divergence with the price. This divergence tells of weakness in the move up. Buyers might be taking profit, so the price can pull back to the 0.97620 support before continuing the upside move.

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