USD/CHF price forecast as Swiss retail sales dive

The USD/CHF price retreated slightly on Friday after the relatively mixed economic data from Switzerland and an important speech by SNB’s Jordan. It is trading at 0.9688, which is about 0.77% below the highest level this year. 

Swiss retail sales retreat

The Swiss economy is in a mixed place as the cost of most items rises. According to the country’s statistics agency, retail sales collapsed by 6.6% in March this year after rising by more than 10% in the previous month. It was the worst decline since January when sales dropped by 0.5%. 

Also, it was the worst decline since March 2021. Like in most countries, retail sales are important in Switzerland because they form the biggest part of the country’s economy. 

On a positive side, additional data by KOF Institute showed that the country’s leading index rose from 99.2 in March to 101.7. This increase was better than the median estimate of 99.4. 

The leading index is important data that is designed to predict the direction of the Swiss economy in the next six months. It is calculated by looking at important sub-indices like consumer confidence and housing.

Therefore, like the Bank of Japan, there is a likelihood that the Swiss National Bank will maintain a dovish tone in the coming months.

The next key catalyst for the USD/CHF pair will be the upcoming US personal consumer expenditure (PCE) data that will come out on Friday. These are important numbers because they are the most closely-watched inflation data by the Federal Reserve.

Analysts expect that the headline PCE index rose to a multi-decade high of 6.5% while personal spending eased. Recent data also showed that some key sectors of the American economy were slowing down. For example, retail sales and pending home sales crashed in March.

USD/CHF forecast for May

The USD/CHF pair has been in a strong bullish trend as the US dollar rally continued. As a result, the pair rose to a high of 0.9758, which was the highest level since May 2020. 

On the daily chart, the pair managed to move above the important resistance at 0.9460. It also rose above the 25-day and 50-day moving average while the Stochastic Oscillator moved above the overbought level. Therefore, there is a likelihood that the pair will resume the downward trend in May as investors take profit and the US dollar stabilizes.