USD/CHF plummets to multi-year lows following US PPI figures

• USD/CHF recorded more than 0.85% losses on the day, falling below the 0.8600 mark.
• Following soft CPI and PPI figures from the US from June, investors take of the table an additional hike by the Fed past July.
• Jobless Claims decelerated in the week ending on July 7.
• Declining US Treasury yields made the DXY dive to lows since April 2022.

On Thursday, the USD/CHF tallied a six-day losing streak, falling below the 0.8600 mark for the first time since January 2015. In that sense, soft Consumer Price Index (CPI) and Produce Price Index (PPI) data from the US fueled a widespread USD weakness as its DXY index fell below the 100.00 level for the first time since April 2022.

The Producer Price Index (PPI) from the US from June came in at 0.1% MoM, less than the 0.2% anticipated, and the Core Figure came in at 2.4%, falling short of the 2.6% forecast. Furthermore, US Jobless Claims for the week ending July 7 slowed down. It was reported that 237K people filed their first state unemployment insurance claims, less than the consensus estimate of 250K and the previous figure of 249K.

The yields on US Treasury bonds are falling in response to the US data. The 2-year yield decreased to 4.62%, the 5-year rate to 3.85%, and the 10-year yield decreased to 3.77% all displaying more than 2% slides. 

Despite this, the CME FedWatch tool indicates that investors continue to wager on a 25 basis point increase by the Federal Reserve (Fed) in July.  The declining yields reflect a drop in the likelihood of a subsequent hike after July, which is now just about 15%, down from 40% at the beginning of the week.

On the CHF’s side, investors will eye the release of the Producer Price Index from Switzerland from June on Friday, expected to decline 0.2% MoM from the previous 0.3% reading.

USD/CHF Levels to watch

According to the daily chart, the daily chart suggests a bearish outlook for the USD/CHF. However, the Relative Strength Index (RSI) pierced through the oversold threshold of 70.00, suggesting that an upwards correction may be on the horizon to consolidate the latest downward movements. 

If there is an upwards correction, short-term resistance levels line up at 0.8665, 0.8700 and 0.8750. In case bears continue to gain momentum, supports are seen at 0.8500, 0.8360 and 0.8300 (January 15, 2015 low).

USD/CHF Daily chart