USD/CHF forecast as the Swiss economy rebounds

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Sep 7, 2021
  • The USD/CHF pair rose on Tuesday as the US dollar rebounded.
  • The pair ignored the spectacular economic numbers from Switzerland.
  • The data showed that the economy rebounded in the second quarter and is approaching pre-pandemic levels.

The USD/CHF price bounced back as the US dollar bounced back. The pair tilted higher even after the relatively encouraging economic data from Switzerland. It is trading at 0.9186, which was the highest level since 1st September. 

Switzerland economic rebound 

The Swiss economy has bounced back, helped by higher external demand and robust consumer spending. 

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Recent data by the SECO  showed that the country’s GDP recovered by 1.8% in the second quarter. This was only 0.5% below where it was below the pandemic started. As such, the country will likely exceed this level in the third quarter of the year. 

The economy rebound was mostly because of the easing of lockdowns in the quarter. Indeed, some of the worst-performing sectors during the pandemic recorded most gains. For example, the hotel and restaurant industry bounced back by about 48%. Similarly, the arts and entertainment sectors rose by 52.9%.

The USD/CHF pair also reacted to the relatively strong Swiss employment numbers. Data by the Federal Statistics Office (FSO) showed that the country’s unemployment rate declined from 3.0% in July to 2.9% in August. This makes it one of the countries with the lowest unemployment rate in the world. 

Still, Switzerland has defied the Philip’s curve as the inflation rate has remained stubbornly low. The country’s inflation rose to 0.9% in August, the highest level since October 2018. Philip’s curve usually suggests that a country’s inflation will typically rise when the unemployment rate falls. 

Therefore, the Swiss National Bank (SNB) will likely maintain its overall dovish stance in the coming meetings. Besides, the bank has always made the case that the Swiss franc is extremely overvalued against other currencies like the US dollar and the euro. 

USD/CHF forecast 

USD/CHF

The three-hour chart shows that the USD/CHF pair has been in a tight range in the past few weeks. In this range, the pair has struggled moving above the key resistance level at 0.9206 and below the key support at 0.9100.At the same time, the MACD remains at the neutral level. Therefore, the pair will likely remain in this range in the near term. A bullish outlook will be confirmed if it moves above the key resistance level at 0.9206.

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