USD/CHF Price Forecast: NFP rally stalls at 0.8100, retraces
- USD/CHF clears 50-day SMA after strong US payrolls.
- Bullish RSI supports recovery, but sideways trading likely persists.
- Break above 0.8150 exposes 0.8200 and yearly high.
The USD/CHF registers modest gains of over 0.30% as the Greenback is boosted by a solid US Nonfarm Payrolls report, pushing the pair above the 50-day Simple Moving Average (SMA) to reach a daily high of 0.8126. At the time of writing, trades at 0.8098.
USD/CHF Price Forecast: Technical Outlook
The USD/CHF trades just above the 50-day SMA but off daily highs, suggesting sellers have moved in to push the pair below 0.8100. Nevertheless, the overall trend remains upwards unless it falls below the August 20 swing low of 0.7949, which could exacerbate a move towards the 200-day SMA at 0.7932.
The Relative Strength Index (RSI) has turned bullish, but since it has pierced the 50-neutral level, USD/CHF is expected to trade sideways in the short term.
For a bullish resumption, USD/CHF needs to clear 0.8100. A move past that level can pave the way for a recovery towards 0.8150, with buyers setting their sights on 0.8200. Above the next area of interest is the yearly high at 0.8207.
On the downside, a decisive breakout below 0.8000 will expose the 100-day SMA at 0.7995, followed by the 0.7949 August 20 daily low. Beneath sits the 200-day SMA at 0.7932.
USD/CHF Price Chart – Daily
Mexican Peso FAQs
What key factors drive the Mexican Peso?
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
How do decisions of the Banxico impact the Mexican Peso?
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
How does economic data influence the value of the Mexican Peso?
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
How does broader risk sentiment impact the Mexican Peso?
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.