USD/CHF Rose On Robust US Labor Market Data

Fundamental Analysis

* Job Juggernaut: The USD/CHF pair has strengthened following the release of updated Nonfarm Payroll (NFP) figures from the US on last Friday, which exceeded market expectations. This has led to speculation that the Federal Reserve may adopt a more hawkish stance, contrasting with the Swiss National Bank’s (SNB) policy, which could benefit the USD. The newly reported NFP for May increased to 272K from April’s revised 165K, far surpassing the forecasted 185K. Such strong data has reduced the likelihood of a Fed rate cut in September. The US Unemployment Rate rose to 4% from 3.9%, accompanied by a slight decline in the Labor Force Participation Rate, which fell to 62.5% from 62.7%. Additionally, Average Hourly Earnings grew by 4.1% year-over-year, up from the revised 4% in April, indicating rising wage inflation. In contrast, the SNB began an easing cycle in its March meeting, lowering rates by 25 basis points to 1.5%. Currently, there is a 55% probability of another rate cut at the upcoming meeting on June 20.

Technical Analysis

* Technical Breakout: USDCHF was traded higher following prior rebound from the support level 0.89150. MACD which illustrate bullish momentum signal suggest the pair to further extend its rebound.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 0.90250. Conversely, a potential retracement is also to be expected and the price could head back towards 0.89150.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will now turn their attention towards this week’s US inflation data and the Federal Reserve’s (Fed) monetary policy meeting to gauge further sentiment.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Japan data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.