USD/CHF It is on a downward trend after cutting its highest price since November last year. The US dollar fell as the Fed started issuing dovish signals. A higher retrace has been seen, but the 100 SMA (green) acts as a resistance on the daily chart, stopping the rise twice.
After the release of the US ISM service PMI last week, the 100SMA once again rejected the price, far below expectations at 50.3, barely avoiding contraction territory. The Employment sub-index also contracted, and the sub-index payment price also fell significantly, returning to May 2020 levels. As a result, the market has adjusted its expectations and is now pricing in further rate hikes from 2020. Federal Reserve System (FED).
The Swiss headline consumer price index (CPI) was reported to have grown 2.2% year-on-year, while the core index at constant variables was 1.9% year-on-year. The Swiss National Bank (SNB) has set its inflation target just below 2%, so with the CPI approaching that level, the central bank may pause at its June meeting. Even if the SNB decides to raise rates, it will likely be the last rate hike of the cycle.
Examining the daily chart of the USD/CHF currency pair, we can see that the rise of the US Dollar against the Swiss Franc is meeting resistance around the 0.91 level where the 100 SMA is located. The zone acted as strong support earlier this year, but eventually collapsed as the market began pricing in a Fed rate cut following the March regional banking crisis. On Thursday, the pair saw a sharp 130 pips flashdown after US jobless claims jumped to its highest level since October 2021, but held at the 50 MA (yellow). So, despite the hawkish comments of Mr. Charmain of the Swiss National Bank, the situation is unclear at the moment.
Comment from SNB Jordan
- Inflation is more persistent than we think
- It is really important to bring inflation in Switzerland to a level of price stability
- If inflation stays below 2% for a long time, you’re fine
USD/CHF
