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  • The US producer price index fell by 0.5% in July.
  • The initial jobless claims in the US went up for a second consecutive week.
  • RSI shows weakness in bears in the 4-hour chart.

Today’s USD/CHF forecast is bearish as indicators of US inflation point downward. Underlying producer inflation looks to be dropping, and US producer prices unexpectedly declined in July. This drop was due to a decline in the price of energy products. Meanwhile, jobless claims increased for a second consecutive week in a still-tight labor market.

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According to the Labor Department’s announcement on Thursday, the producer price index for final demand fell 0.5% last month. It marked the first monthly reading that was negative since April 2020. In June, the PPI increased by 1.0%.

According to economists surveyed by Reuters, the PPI was expected to grow 0.2% in July and 10.4% on an annual basis. Eighty percent of the drop resulted from a 16.7% drop in fuel prices. Diesel fuel, liquefied petroleum gas, and household natural gas costs also went down significantly.

“A peak in annual inflation measures is a welcome sign for consumers, businesses, and the FOMC, but historically elevated price dynamics churning in the economy will likely persist through the end of the year,” said Mahir Rasheed, U.S. economist at Oxford Economics.

USD/CHF key events today

The United States will release the import and export price indices, which are expected to fall. Investors also expect a drop in the Michigan consumer sentiment and expectations reports.

USD/CHF technical forecast: Bulls trying their luck above the 0.93757 support level

USD/CHF forecast

Looking at the 4-hour chart, we see the price bouncing off the 0.93757 level and pushing higher. The price is trading below the 30-SMA, showing control lies with the bears, but the RSI shows weakness in bearish momentum. There is a bullish divergence in the RSI, which could mean a reversal in the trend.

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The price might retest previous support as resistance at 0.93757; if bulls gain momentum, we could see it breaking above this level. The trend will, however, only reverse if the price breaks above the 30-SMA and the RSI starts trading above 50. Until then, the trend remains bearish.

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