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Rejection at Local Resistance Signals Downside Move Could Extend Further
Forex
Economic
Summary:
The RSI recently reached 54, briefly touching the neutral area before turning back down to show that bearish sentiment continues to dominate.
Sell
TradingUSDCHF
EXP
0.80121
Entry Price
0.79110
TP
0.80800
SL
0.80275 +0.00155 +0.19%
0
Point
Flat
0.79110
TP
CLOSING
0.80121
Entry Price
0.80800
SL
Recent developments in the Middle East have helped ease inflation concerns across markets, while investors also digest the implications of the U.S. Treasury Department's decision to expand its bond buyback program aimed at keeping long-term yields in check, particularly on the 30-year Treasury note.
Among the key headlines from the region, reports from Al Arabiya and Al Hadath noted that Pakistan's Army Chief Asim Munir conveyed a U.S.-backed proposal to Iran. The offer reportedly contemplated lifting the blockage in the Strait of Hormuz in exchange for reopening the maritime route and halting actions by Tehran-aligned groups. However, Iranian officials dismissed those claims, clarifying that Munir was seeking to facilitate new talks and convey Iran’s terms and positions to Washington.
Meanwhile, the White House announced the start of mine-clearing operations in the Strait of Hormuz, news later confirmed by two U.S. officials cited by Axios. This step has been viewed as a positive sign toward normalizing maritime traffic and restoring stability in energy markets.
In the United States, economic releases presented a mixed picture. On one hand, the labor market maintained its strength, supported by a notable improvement in the four-week moving average of ADP employment change. Additionally, July building permits showed an uptick, pointing to ongoing resilience in broader economic activity.
However, other indicators pointed to softening domestic demand. New home sales dropped 10.5% month-over-month in July, sliding to an annualized rate near 607,000 units, while inventory climbed to roughly 488,000 homes. At the same time, consumer confidence fell to 89.4 in August, and the expectations index dropped to 68.2—remaining well beneath the 80 threshold typically tied to recession risks.
In Switzerland, July inflation delivered another downside surprise. The Consumer Price Index (CPI) slipped 0.1% month-over-month, missing expectations for a flat reading. The main drag on price growth came from the transportation sector, where prices fell 0.4% on the month, contrasting with the 0.6% increase expected by consensus.
Looking at individual components, domestic prices rose 0.5% year-over-year, while imported goods prices held steady compared to the prior year. This trend reflects diminishing pressures from imported energy costs, which had previously fueled inflation following Middle East geopolitical tensions.
The Swiss National Bank's (SNB) latest projection places average third-quarter inflation at 0.7% year-over-year. However, recent data points to a milder path, with quarterly inflation tracking near 0.5%—roughly 0.2 percentage points below official forecasts. Declining fuel prices have driven this slowdown, and should this trend hold, inflation could keep running below central bank projections.
Technical Analysis
USDCHF reacted lower upon reaching resistance at 0.8038—a level that previously acted as support before flipping to resistance, adding weight to a potential extended decline toward the next support target at 0.7911, a level not visited since June 16. Price action continues to follow a descending trendline without printing a higher high, highlighting persistent downside strength, while the 100-period and 200-period moving averages sit at 0.7910 and 0.7869, reinforcing the broader downtrend and supporting further losses.
Turning to the oscillators, the RSI recently reached 54, briefly touching the neutral area before turning back down to show that bearish sentiment continues to dominate. Meanwhile, the MACD shows a bullish histogram that is rapidly losing depth, while the signal lines remain inside negative territory; overall oscillator signals point toward an extended move lower, keeping the downside path favored.
Trading Recommendations
Trading direction: Sell
Entry price: 0.8012
Target price: 0.7911
Stop loss: 0.8080
Validity: Sep 04, 2026 15:00:00
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