The USD/CHF is experiencing an increase in value, continuing its recovery into the upper 0.8900s following a busy Thursday marked by US economic data and renewed speculation of a Fed rate cut. Despite disappointing reports on labor market fragility and sector contraction, the strong US Dollar Index and risk-sensitive flows have kept the greenback steady ahead of Friday’s release of the nonfarm payrolls report.
The week ending April 26 saw a significant rise in US jobless claims to 241,000, surpassing the previous week’s 223,000 and exceeding expectations. This jump marked the highest level since August 2023, raising concerns about a possible decline in the labor market. The ISM Manufacturing PMI also showed a slight decrease from 49.0 in March to 48.7, remaining in contraction territory. While new orders and production slowed, the employment subindex showed a slight improvement from 44.7 to 46.5, indicating a continued reduction in factory payrolls.
The Prices Paid Index, which measures inflation, rose to 69.8, indicating that input costs remain high and keeping inflation risks in focus. Market reaction was mixed, with some risk assets performing well due to strong tech earnings. However, the US Treasury curve remains inverted, with the two-year yield below the Fed funds rate, fueling expectations for monetary easing.
Treasury Secretary Scott Bessent reinforced this sentiment on Thursday, stating that the yield configuration highlights the need for the Federal Reserve to make rate cuts. According to futures pricing, the market now expects the Fed to cut rates by over 100 basis points by the end of 2025. Former Fed Chair Janet Yellen also added pressure by warning about the adverse effects of President Trump’s tariff strategy on growth, given the ongoing trade standoff with China and stalled talks.
In European trade, the Swiss Franc remained generally weak as markets remained focused on US data. The Dollar’s strength was also supported by cautious traders waiting for Friday’s release of the US jobs report, which will be crucial in confirming recent trends and could determine the Fed’s next move.
From a technical standpoint, the USD/CHF is gradually rising after bouncing back from last week’s lows. The pair has climbed back above its 10-day EMA and is now testing resistance near the 0.9000 mark. Although short-term momentum is supporting further gains, the overall trend remains uncertain. Support can be found at 0.8920, followed by 0.8880 and 0.8840. On the upside, resistance is at 0.9000 and 0.9040, with a sustained rally above these levels potentially leading to the March highs around 0.9080.
As the labor market softens and inflation pressures persist, the Fed’s next steps will depend heavily on upcoming data. All attention is now focused on the April nonfarm payrolls report, which could determine the next direction for the USD/CHF. Until then, the pair may remain relatively range-bound but with a slight upward bias.