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USDCHF Lower Amid Weak Employment Data And Fears of Negative U.S. Rates 

May 9, 2020
USDCHF Daily Chart
USDCHF Daily Chart

USDCHF trades lower for the second day after yesterday the pair rejected at the 200-day moving average. The U.S. economy is contracting at a fast pace amid the coronavirus outbreak. Yesterday, the U.S. Initial Jobless Claims came in at 3169k, beating the expectations of 3000k on May 1, the previous week reading was at 3.839k. The Unit Labor Costs came in at 4.8% above the expectations of 4% in the first quarter of 2020. Nonfarm Productivity came in at -2.5% topping the forecasts of -5.5%. 

Also, the ADP employment change came down to -20.263M for April below the expectations of -21.00M. Large businesses with 500 employees or more cut 8.9 million jobs. The Service sector lost 16 million jobs in April; hotels and restaurants lost 8.6 million, while the retail sector lost 3.4 million positions. 

For the last seven weeks, about 33 million Americans filed for unemployment benefits in the last seven weeks. The unemployment rate is expected to surge to at least 16%.

Investors fear that the dismal economic data and a historic contraction in the second quarter will force the Fed to proceed with negative interest rates. 

The technical picture is neutral for the pair as it is trapped between the 100 and 200-day moving average. Yesterday’s rejection at the 200-day moving average canceled the recent positive momentum. 

On the downside, support for the pair stands at 0.9706, the daily low. The critical support for USDCHF is the 100-Day moving average at 0.9692. A break below will provide a bearish signal. The next support area is at 0.9649, the 50-day moving average. 

On the contrary, the first support for USDCHF will be met at 0.9738 on the daily top. A break above 0.9738 might open the way for a test of the critical resistance at the 200-day moving average (0.9789). If the pair breaks that resistance, then bulls will be in control, targeting 0.9833 the high from March 25. 

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