Key Highlights
- USD/CHF declined heavily below the 0.9740 and 0.9630 support levels.
- A major bearish trend line is forming with resistance near 0.9650 on the 4-hours chart.
- The US ADP Employment changed 183K in Feb 2020, more than the 170K forecast.
- The US Initial Jobless Claims for the week ending Feb 29, 2020 could decline from 219K to 215K.
USD/CHF Technical Analysis
After forming a crucial top near the 0.9848 level, the US Dollar started a major decline against the Swiss Franc. USD/CHF broke the key 0.9740 support area to enter a bearish zone.
Looking at the 4-hours chart, the pair even tumbled below the 0.9630 pivot area, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).
It opened the doors for more losses and the pair dived close to the 0.9500 support. A low is formed near 0.9515 and the pair is currently consolidating losses. It tested the 23.6% Fib retracement level of the drop from 0.9848 to 0.9515.
On the upside, there are many hurdles on the upside near the 0.9600 and 0.9630 levels. Moreover, there is a major bearish trend line forming with resistance near 0.9650 on the same chart.
Therefore, the pair must climb above the 0.9600 and 0.9630 resistance levels to start a decent recovery wave. Conversely, USD/CHF could fail to recover and it might continue to move down below the 0.9540 and 0.9520 support levels. The next key support is near the 0.9485 level.
Fundamentally, the US ADP Employment Change figure for Feb 2020 was released by the Automatic Data Processing, Inc. The market was looking for a 170K rise in jobs, less than the last 291K.
The actual result was better than the forecast, as the US ADP Employment increased 183K. However, the last reading was revised down from 291K to 209K.
Commenting on the report, the vice president and co-head of the ADP Research Institute, Ahu Yildirmaz stated:
The labor market remains firm, as private-sector payrolls continued to expand in February. Job creation remained heavily concentrated in large companies, which continue to be the strongest performer.
Overall, USD/CHF might correct higher, but upsides are likely to face hurdles near 0.9630. Looking at EUR/USD, the pair started a downside correction from the 1.1213 high, while GBP/USD consolidated above 1.2725.
Upcoming Economic Releases
- US Initial Jobless Claims – Forecast 215K, versus 219K previous.
- US Factory Orders Jan 2020 (MoM) – Forecast -0.1%, versus +1.8% previous.
