USD/CHF technicals hint to a possible rise to 0.9100
- The USD/CHF price rose for the fifth consecutive day.
- Switzerland released weak consumer sentiment data.
- Focus shifts to the US nonfarm payrolls.
The USD/CHF price rose for the fifth consecutive day after the relatively weak Swiss consumer sentiment data. The overall strong dollar ahead of the US nonfarm payroll numbers has also contributed. It is trading at 0.9023, which is the highest it has been since December 1.
Swiss consumer confidence falls
The Swiss consumer sentiment continued to deteriorate this year as the number of coronavirus cases in the country continued to rise. According to SECO, the sentiment declined to -15 from the previous month’s -12. The figure has been in the negative category since May 2018. It is also below its long-term average of -5.
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In total, the participants in the survey expressed worries about the general economic development, budget, and their financial situation.
Still, Switzerland’s economy has outperformed that of its peers. The economy bounced back by 7.2% in the third quarter and declined by about 1% in the fourth quarter. The government expects it to rebound later this year.
This week, the USD/CHF reacted to the relatively strong data from the country. The Swiss retail sales rose by 4.7% in December while the manufacturing PMI increased from 58.0 to 59.4 in January.
Meanwhile, the pair has also rallied because of the overall strong dollar. The dollar index has jumped by 0.33% today, continuing the rally that started in January. This performance is happening as traders wait for the important nonfarm payrolls that will come out tomorrow.
On Wednesday, data by ADP showed that the American economy added more than 140,000 jobs. The data came two days ahead of the NFP data. Economists in most forex brokers and investment banks believe that the economy added more than 150,000 jobs. They also see the unemployment rate staying at 6.7%.
USD/CHF technical outlook
The USD/CHF reached a multi-year low of 0.8758 in January. After that, the pair formed an inverted head and shoulders pattern whose neckline was at 0.8922. This week, bulls managed to move above this neckline. Also, the price has moved above the 15-day and 25-day smoothed moving averages (SMA) while oscillators like the Relative Strength Index (RSI) and MACD have continued rising.
Therefore, the pair will likely continue rising as bulls target the resistance at 0.9100. The distance between the head and shoulder and the shoulder and 0.9100 is the same.