Swiss franc off 4-month high against yen amid persisting deflation

The Swiss currency snapped a 10-day gaining streak against the yen on Tuesday, 9 June, and moved off an over four-month high with deflation risks remaining and the unemployment rate holding steady.

The Swiss jobless rate stood at 3.3% in May, unchanged from April. The consumer price inflation came at -1.2% on a year-on-year basis from -1.1% a month ago, in line with expectations.

On a monthly basis, the rate rebounded to 0.2% from -0.2%, beating market expectations of 0.1%.

The CHF/JPY slipped to 133.41 from the previous close of 133.62, which was its highest daily close since 26 January. The pair had touched an intra-day high of 134.64 earlier in the day before losing ground on the data.

Technically, the break of the 132.0 resistance in early June has opened the doors to new highs for the cross as all Fibonacci retracement levels of the January-March selloff in it have been broken with that.

As long as the 128-131 support zone holds, the cross has its risks more skewed to the upside with round numbers like 135.0 and 140.0 coming in focus as next resistance barriers.

Against the dollar, the Swiss franc had strengthened to a three-week high of 0.9246/$ earlier on Tuesday before weakening to 0.9284/$.

The downtrend in the USD/CHF pair since 27 May is now testing the 61.8% Fibonacci retracement of the uptrend over the previous two weeks, coming close to 0.9240.

Further on the downside, 0.9178 is a level to watch for ahead of the mid-May low near 0.9070.

On the higher side, the pair will look at 0.9370 as first resistance but only a break of 0.9430 will be crucial as it falls on the 50-day moving average, which the pair failed to break in the attempt made in the last week of May.

A break of that will open the doors to 0.9545, the May high, and then the levels to watch will be around 0.9700 and above.