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  • USD/CHF declined sharply on Friday amid falling US yields. 
  • Unclear Fed’s stance continues to weigh on the Greenback.
  • Poor US data acted as another key factor for the bearish trend.
  • Fed’s meeting minutes and US retail sales data can provide further stimulus to the market next week. 

The USD/CHF weekly forecast is bearish amid broader Dollar sell-off that stemmed from falling US Treasury yields and poor data. The USD/CHF started the week on a positive note and maintained a bullish tone throughout the week until we saw a huge fall on Friday.

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The USD/CHF pair closed the week at mid-0.9100 near the lows after posting weekly highs around mid-0.9200.

On Thursday, US July Producer Price Index (PPI) turned inflation upside down, setting an annualized growth rate of 7.8% for a single month, but the pair fell far short of its high, reaching only 110.55.

Financial investments are finally catching up with concerns about the delta option. In the early part of the week, gold prices fell but stayed low due to concerns about the Coronavirus. In addition, the list of banned cities is growing as countries around the world impose social distancing and mask restrictions.

It’s not surprising that consumers, investors, and businesses are getting nervous as this trend spreads. If other countries enact tighter restrictions this fall, travel and recreation could be adversely affected.

The University of Michigan Consumer Sentiment Index dropped to its lowest level since 2011. The drop in investor confidence in Germany coincided with this. The largest decrease recorded is unexpected, even though we expected a decline.

It is unclear what policy the Federal Reserve will take. Richard Clarida, vice chairman of the bank, has hinted that bond purchases may be approaching. It remains to be seen whether the Jackson Hole Conclave will reach a consensus at the FOMC meeting a month later on the Fed’s claim that inflation has risen suddenly.

Switzerland’s key economic events during Aug 16-20

There is only data for CHF next week. The trade balance figures are due on Thursday. However, the event is not strong enough to trigger volatility in the market.

America’s key economic events Aug 16-20

The risks appetite and stocks will be closely monitored next week. In addition, the calendar is rife with event risk. US retail sales are expected to be the most important release for the dollar, along with the minutes of the recent FOMC meeting. Fed Chair Powell’s speech is due on Tuesday as well. However, not much is expected from the event. It is expected that costs will decline, and a decline could lead to a sharp sell-off.

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USD/CHF weekly technical forecast: Sell on strength

USD/CHF weekly forecast - daily chart
USD/CHF weekly forecast – daily chart

The USD/CHF pair fell sharply on Friday. The daily chart shows a widespread down bar exerting plenty of selling pressure. However, the price finds support just around the weekly lows as the key SMAs converge. The price may find some upside correction because of profit-taking on Monday. However, the broader trend remains under clouds. More sellers can enter the market on any upside attempt. The downside targets can be at 0.9130 (SMAs convergence) ahead of 200-day SMA and a horizontal level of 0.9075. On the upside, the 0.9200 level ahead of 0.9250 may continue to provide resistance.

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