Slips further to near 0.8400

• USD/CHF drops further to near 0.8400 as US dollar weakens ahead of US NFP.
• Risk-averse market sentiment has improved the safe-haven appeal of the Swiss franc.
• The Fed is expected to start cutting interest rates this month.

The USD/CHF pair is falling close to the support at the 0.8400 round level in the European session on Friday. The Swiss franc’s losing streak extended for a fourth trading session amid absolute weakness in the US dollar (USD). The US dollar index (DXY), which tracks the greenback against six major currencies, is retracing its weekly low below 101.00 amid rising risks to the health of the United States (US) labor market.

Market sentiment remains risk-averse ahead of US non-farm payrolls (NFP) data for August due at 12:30 GMT. The risk aversion profile has enhanced the safe haven appeal of the Swiss Franc (CHF).

Investors are eagerly awaiting the US NFP data as it will influence the likely size of the Federal Reserve’s (Fed) interest rate cut at its monetary policy meeting this month. Economists estimate that US employers hired 160,000 new workers in August, up from 114,000 in July. During the same period, the Unemployment Rate is expected to have decreased to 4.2% from the previous release of 4.3%.

Meanwhile, the Swiss National Bank (SNB) is expected to cut interest rates again this month as inflationary pressures in the Swiss region continue to ease. Switzerland’s annual consumer price index (CPI) decelerated at a faster-than-expected pace to 1.1% from estimates of 1.2% and from the first release of 1.3%.

USD/CHF is falling towards the horizontal support drawn from the December 28, 2023 low of 0.8333 on a daily time frame. The short-term and longer-term outlook for Swiss franc assets remains bearish as all short-term and long-term exponential moving averages (EMAs) are down.

The 14-day Relative Strength Index (RSI) is hovering in the bearish range of 20.00-40.00, suggesting that a strong bearish momentum is intact.

More downside would occur if the asset breaks below the 0.8400 round support, which would pull the major towards the December 28, 2023 low of 0.8333 and the 0.8300 round support.

On the other hand, a recovery move above the weekly high near 0.8540 will lead the asset towards the round level resistance of 0.8600 followed by the August 20 high of 0.8632.

USD/CHF Daily Chart