The Swiss central bank may cut interest rates again at the next meeting.

The Swiss franc has continued to strengthen against the US dollar, reaching its highest level since the Swiss central bank cut interest rates last month. Meanwhile, the dollar remains under pressure as investors expect the US central bank to cut interest rates several times this year, with more dovish statements from several Fed officials, including Fed Chairman Jerome Powell, who expressed increased confidence that inflation will return to the target range.

Switzerland's trade surplus increased to 4.9 billion Swiss francs in June from 4.2 billion Swiss francs in the previous month, the highest trade surplus since September 2023. Exports rose 1.2% month-on-month to 23.3 billion Swiss francs, driven by over 5% increases in automotive and chemical product sales. Most exports continued to rise to Russia, Japan, and China. Meanwhile, imports fell 2.2% from the previous month to 18.3 billion Swiss francs, driven by a more than 11.2% decrease in raw material purchases, as well as a decline in chemical and medical equipment products.

The consumer confidence index in Switzerland rose to -36.6 in June from -38 in the previous month, supported by a more positive outlook on the overall economic situation due to the central bank's interest rate cuts. Financial stability in both the corporate and household sectors is expected to increase. Additionally, more consumers have started to purchase goods again.

Switzerland's manufacturing PMI stood at 43.9 in June, down from 46.4 in the previous month and worse than market expectations of 45.2, marking the 18th consecutive month of contraction. This was pressured by a decline in product manufacturing, while new orders fell again due to higher transportation costs, resulting in a slight decrease in employment.

The yield on 10-year Swiss government bonds fell to 0.57%, following the decline in US government bond yields, after the US inflation report came in lower than expected. This has led to expectations that the Fed will make its first rate cut in September. Meanwhile, the Swiss central bank is likely to continue cutting interest rates as inflation returns to the central bank's target range.

Techical analysis data (5H)

Resistance: 0.8828, 0.885, 0.8866

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.8774 - 0.879 but cannot break the support at 0.879, you may set a TP at approximately 0.885 and SL at around 0.8752 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.8828 - 0.885, you may set a TP at approximately 0.8866 and SL at around 0.8774 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.8828 - 0.885 but cannot break the resistance at 0.8828, you may set a TP at approximately 0.8774 and SL at around 0.8866 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.8774 - 0.879, you may set a TP at approximately 0.8752 and SL at around 0.885 or according to your acceptable risk.

Pivot point July 25, 2024 08:02 PM. GMT+7