USD/CHF traded lower on Friday, marking its second consecutive weekly decline as the US Dollar continued to weaken broadly. At the time of reporting, the pair was quoted around 0.7773, near its lowest level in two months [1]. The decline in the Greenback was attributed to improving sentiment around a potential US-Iran agreement, with markets cautiously optimistic that a deal could be reached soon. US Secretary of State Marco Rubio stated that the United States expects a response from Tehran on its latest peace proposal later in the day [1].
The US Dollar Index (DXY), which measures the currency against a basket of six major peers, fell to approximately 97.94, down about 0.34% on the day, approaching levels seen before the onset of the Middle East conflict [1]. However, ongoing tensions, including fresh reports of clashes between US and Iranian forces near the Strait of Hormuz, limited further downside for USD/CHF [1].
Market participants also digested the latest US employment data. The US Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) increased by 115,000 in April, surpassing expectations of 62,000 but slowing from March’s revised gain of 185,000. The Unemployment Rate remained steady at 4.3%, matching forecasts. Average Hourly Earnings rose 0.2% month-on-month in April, below the expected 0.3%, while annual wage growth accelerated to 3.6% from 3.4%, missing the forecast of 3.8% [1]. These figures support expectations that the Federal Reserve may remain patient before cutting interest rates, as inflation risks tied to higher energy prices persist [1].
From a technical perspective, USD/CHF maintains a bearish near-term outlook, trading below the 20-day Simple Moving Average (SMA) at 0.7830 and just above the lower Bollinger band support at 0.7763. The Relative Strength Index (14) is around 40, indicating weak momentum, while a negative MACD reading reinforces the soft bias. A daily close below 0.7763 could open the door to further losses, keeping bearish momentum intact as long as the pair remains under the 0.7830 resistance level [1].
CONCLUSION
USD/CHF remains under pressure due to broad-based US Dollar weakness and cautious optimism regarding Middle East diplomacy, despite ongoing regional tensions. Mixed US employment data and persistent inflation risks suggest the Federal Reserve may delay rate cuts, contributing to the pair's bearish technical outlook. Market participants are closely watching geopolitical developments and key technical levels for further direction.