The Swiss franc and the Japanese yen are emerging as “more attractive” alternatives to the dollar as safe-haven assets, ING says. “With the possibility of grim U.S. economic and pandemic prospects starting to weigh on USD now, both CHF and JPY may be looking at more gains vs the greenback,” ING FX strategist Francesco Pesole says. USD/CHF is last flat at 0.9119, near an earlier five-and-a-half year low of 0.9110, according to FactSet. USD/JPY rises 0.2% to 105.131, according to FactSet.
The U.S. gross domestic product’s contraction at a record 32.9% annual rate last quarter and a rise in weekly jobless claims to 1.43 million add pressure on U.S. officials to agree on extending government stimulus measures such as unemployment benefits that expire on July 31, says Rupert Thompson, chief investment officer at Kingswood. “Today’s data can only increase the pressure on the Republicans and Democrats to reach an agreement on extending the government stimulus measures which expire tomorrow,” he says. Yet the path of the economy hinges on the course of the virus and economic recovery has already shown signs of slowing significantly in response to the recent surge infections and re-imposition of social distancing measures, he says.
USD/CHF Under Pressure:
Currently trading at CHF 0.9141, the US Dollar is under pressure and is capped by its declining 50-period moving average at CHF 0.9144. In addition, the intraday RSI remains within its selling area between 50 and 30 and confirms the bearish bias. Below horizontal resistance at CHF 0.9155, further weakness toward strong horizontal support at CHF 0.9115 and toward CHF 0.9095 is expected. A third target is set at CHF 0.9080. Alternatively, an upside breakout of CHF 0.9155 would trigger a bullish acceleration toward previous overlap at CHF 0.9185 and toward horizontal resistance at CHF 0.9210 in extension.
Key resistance at 105.20. The pair has repeatedly failed to break above the key resistance at 105.20. Meanwhile, it is struggling to keep the key level of 105.00. A return to the immediate support at 104.75 (around the low of yesterday) would open a path toward 104.45 on the downside. Alternatively, a cross above 105.20 would trigger a further advance toward 105.45 on the upside.