USD/CHF on track for the 5th weekly decline as Swiss unemployment falls
- The USD/CHF pair has declined for the fifth weekly decline.
- Data from Switzerland shows that the unemployment rate declined in April.
- The path of least resistance is lower ahead of the US NFP data.
The USD/CHF is on track for the fifth weekly loss as the Swiss economy recovers and as questions of the Federal Reserve monetary policy decisions remain. The pair dropped to 0.9075, which was the lowest level since March 1.
Swiss economic recovery gaining steam
The Switzerland economy is doing relatively well. Early this week, data showed that the manufacturing and services sectors remained vibrant in April.
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And today, data by the statistics agency revealed that the overall unemployment rate declined in April. The rate declined from 3.3% in March to 3.4% in April on a seasonally-adjusted basis. The rate also declined from 3.4% to 3.3% on a not-seasonally-adjusted basis.
These numbers show that most people of working age are working. In contrast, the rate is relatively higher in many developed countries. For example, in the United States, data is expected to show that the unemployment rate declined to 5.8% in April. In the Eurozone, the unemployment rate remains above 7%.
The Swiss economic recovery will likely continue as the country continues to increase its vaccination efforts. The government has already vaccinated more than 2.9 million people and the trend is gaining steam. This week, the country made a deal with Moderna for another 7 million doses of the vaccine. Still, the biggest challenge is that inflation has remained relatively low.
The USD/CHF pair, like all currency majors, will next react to the latest US jobs numbers. In general, analysts believe that the economy continued to add thousands of new jobs in April. The median estimate is that it added more than 900k jobs.
The unemployment rate is also expected to drop. On Thursday, data showed that just 498,000 Americans filed for jobless claims. This was the lowest figure since the pandemic started.
USD/CHF technical forecast
The USD/CHF pair has been on a steep downward trend in the past few weeks. It has dropped by more than 4.25% since April 1. On the daily chart, the pair has moved below the 25-day and 15-day exponential moving averages (EMA). It also dropped below the 50% Fibonacci retracement level while the Relative Strength Index (RSI) has continued to drop.
Therefore, the path of the least resistance is lower, with the next target at 0.9030. However, a move above 0.9200 will invalidate this trend.