USD/CHF started the trading week initially weaker and around the parity level following Friday’s big miss in economic data. Retail sales for March had its second consecutive decline with a -0.2% reading, in-line with the analysts’’ consensus. The retail sales figure excluding also came in worse than expected with a flat reading, expectations were for a 0.1% gain. Core consumer prices for March also had its first decline since 2010, the -0.3% was much worse than the expected flat reading.
Following the disappointing data, some analysts made the call that a June hike could be off the table.
The USD/CHF daily chart shows that since the beginning of the year, price has been steadily making lower highs. The recent bearish move has also taken price below the 100- day SMA, but still respecting the 50-day SMA. If weakness persist, initial support could come from the 200-day SMA which currently trades just below the .9950 level. If we see a major leg lower major support come from a potential bullish Gartley around the .9670 level. Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If valid, we could see a reversal target another return towards the .9850 region.
If the bullish trend returns, major resistance will come from the 1.0300 to 1.0350 zone. Further upside may eventually target the 1.05 level.
The trade: Buy USD/CHF at .9710 with a stop loss at .9660 and a take profit at .9860. The Risk/Reward Ratio is 1:3