USD/CHF forecast: Will the Swiss franc momentum continue in August?

The USD/CHF price retreated to the lowest level since July 16 after the relatively strong economic data from Switzerland. The Swiss franc is trading at 0.9050, which was 2.40% below the highest level in July.

Swiss economic rebound

Switzerland has done a good job in delivering vaccinations. The country has vaccinated more than 8.75 million vaccinations. More than 4 million residents have received two doses of the vaccines. This is notable since the country has a population of slightly below 9 million people.

This vaccination rate and the overall reopening have led to more business activity. According to the latest data by Procure Institute, the manufacturing PMI increased from 66.7 in June to 71.1 in July. This was the highest level since the organisation started collecting the data. It cited the strong growth to the relatively higher local and international demand. 

The Swiss PMI figure was higher than that in many countries. According to Markit, the Eurozone manufacturing PMI declined to 62.8 in July. Similarly, in the UK, the PMI declined from 63.4 to 60.4 in July. Therefore, there is a sense in which the Swiss economy is recovering at a faster rate than its peer countries

The USD/CHF pair also declined after the latest Swiss retail sales and inflation data. According to the Federal Statistics Office (FSO), the turnover of all retail sales declined by 0.4% in June compared with the previous year. The sales declined by 3.6% on a seasonally-adjusted term. Without service stations, the overall sales declined by 1.4% in June 2021 compared to June 2020.

Meanwhile, Switzerland is still struggling with a low rate of inflation. The headline CPI declined by 0.1% in July compared with June. It rose by 0.7% on a year-on-year basis.

USD/CHF technical forecast

The USD/CHF price has been in a downward trend recently. It has declined from a high of 0.9272 on July 2 to 0.9040 today. On the four-hour chart, the pair managed to move below the important support at 0.9120, which was the lowest level on July 15. The pair has also declined below the 25-day and 50-day weighted moving averages (WMA). The Relative Strength Index (RSI) has also moved to the oversold level of 28. Therefore, the pair will likely keep falling as bears target the next key support at 0.900.