USD/CHF declines after SECO boosts Swiss economic forecast
- The USD/CHF pair declined slightly after the latest Swiss economic forecast.
- SECO said that it expects the economy will recover by 3.3% this year.
- The pair will next react to the latest Fed interest rate decision.
The USD/CHF pair declined slightly after Switzerland boosted its recovery forecast. It declined to 0.8965 as investors start focusing on the upcoming US data and Fed decision.
Switzerland economic forecast
The Swiss economy is expected to record a strong recovery as the global economy bounces back and as the country reopens.
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According to a government panel, the economy is expected to bounce back by 3.6% in 2021, up from the previous estimate of 3.0%. It also expects the economy to rise by 3.3% in 2022.
The panel attributed this recovery to the ongoing vaccination drive that has seen many people in Switzerland get vaccinated. Also, the ongoing recovery of the global economy will help the country recover since Switzerland makes a substantial amount of its income from exports. The report said:
“ The continuing recovery is due to have a considerable impact on the labour market, with employment rising significantly (+1.5 %) and the unemployment rate falling further to an annual average of 2.8 % (March forecast: 3.0 %).”
The USD/CHF pair declined as investors waited for the upcoming economic data from the United States and the Federal Reserve interest rate decision. On Tuesday, the US will publish the latest retail sales and producer price index (PPI) data. Analysts expect the overall retail sales declined slightly in May while the producer price index (PPI) rose to more than 6%. On Monday, data from Switzerland showed that the country’s PPI rose by 3.2% in May.
The biggest catalyst for the USD/CHF will be the Federal Reserve interest rate decision that will come out on Wednesday. Analysts expect the bank to leave interest rates and quantitative easing unchanged and pledge to continue with the easing cycle.
USD/CHF technical analysis
The daily chart shows that the USD/CHF pair has been in a strong downward trend lately. It has decline by more than 5% from the highest point in April. However, recently, the pair has found some support around the 0.8930 level. It has also moved below the 25-day and 50-day moving averages. It also seems to be forming a bearish pennant pattern. Therefore, the pair will likely break out lower in the near term. If it happens, the next key level to watch will be the support at 0.8800.