USD/CHF fall this week already tees up key technical test

USD/CHF is one of the more notable movers so far this week, with the pair falling below the 0.9000 level after some consolidation just above that over the last two months. It coincides with a more interesting look for June trading, when you take into account the seasonal pattern here. But in just the third trading day of the month, we have to talk about a key technical test already for the pair.

The added decline yesterday sees the pair run up against a test of its 200-day moving average (blue line). That level is seen at 0.8893 currently. It sits near the 61.8 Fib retracement level of the swing higher this year, seen at 0.8883.

That particular region is now a key support area to watch for USD/CHF in seeing how things may play out next.

Hold above that and buyers are still able to stay in the game for now. But break below, and that is likely to lead to a more protracted decline in USD/CHF instead.

On a break lower, the 50.0 Fib retracement level at 0.8778 will be the next key support level to watch. That alongside the late April low and March lows around 0.8729-45.

For trading this week, the dollar side of the equation is going to be a major factor to be mindful of. With eyes on US labour market data, that will be a key driver of trading sentiment for the days ahead at least.

At the same time, the franc is able to benefit from a more nervous mood overall. Wall Street may have marginally escaped losses overnight but risk sentiment remains on edge for the most part, especially for European stocks.

This article was written by Justin Low at www.forexlive.com.