USD/CHF tests major resistance ahead of US employment reports

USD/CHF yesterday faced rejection at the major resistance area around 0.8925 before testing the same resistance on Friday ahead of the US employment reports.

Technical Analysis

As of this writing, USD/CHF is being traded near 0.8926. Resistance may be seen around 0.8925-35 that is the 50% fib level as well as trendline resistance. A daily closing above the 0.8935 area could push the pair into renewed bullish trend, targeting the 0.9200 handle.

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On the downside, the pair is likely to find support around 0.8896, the 55 Daily Moving Average (DMA), ahead of 0.8869 that is the 38.2% fib level. The pair is bullish in short to medium term unless the price breaks the lower trendline on the daily chart.

Nonfarm Payrolls

The Labor Department of the US is due to release the nonfarm payrolls figure today. The number of new jobs increased to 200K in March as compared to 175K in the month before, the average forecast of different analysts says. Better than anticipated actual reading will be seen as bullish for USD/CHF and vice versa.

Unemployment Rate

The labor department will also release the unemployment rate figure today. According to forecast, the jobless rate declined by 0.1% to 6.6% last month compared with 6.7% in the month before. Not to mention that 6.5% is the threshold set by the US central bank. The Federal Reserve might consider tight monetary policy once the jobless rate falls below the 6.5% target, as per forward guidance.

Conclusion

Trading USD/CHF on breakouts appears to be the least risky strategy. The pair might break the upper trendline on better than expected employment reports. Since tapering in the stimulus is linked to improvement in the labor market, so another cut in QE during the forthcoming US monetary policy is also expected if the data comes better than expectations.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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