- USD/CHF trims intraday losses, supported by the US Dollar’s resilient outlook.
- Focus shifts to upcoming US inflation data, which could shape the Fed’s interest rate trajectory.
- The SNB is anticipated to lower interest rates further to stimulate inflation.
The USD/CHF pair recovers its intraday losses and stabilizes near 0.9160 in Tuesday’s European session, as investors adopt a cautious stance ahead of the US Consumer Price Index (CPI) data for December, set to be released later in the week.
Market participants are closely watching US inflation figures, which will influence expectations regarding the Federal Reserve’s interest rate policy. Year-on-year headline inflation is projected to rise to 2.8% from 2.7% in November, while core inflation is expected to increase steadily at 3.3%. According to the CME FedWatch tool, there is a 69% likelihood of the Fed reducing interest rates at some point this year.
Meanwhile, the Swiss Franc (CHF) has been weakening against the US dollar in recent months, with the Swiss National Bank (SNB) expected to further cut interest rates to address inflationary pressures. The SNB has already lowered its key borrowing rates to 0.5%.
USD/CHF is trading near its 15-month high around 0.9200, and the outlook remains bullish as the 20-week Exponential Moving Average (EMA) near 0.8883 continues to rise. The 14-week Relative Strength Index (RSI) is in the bullish zone between 60.00 and 80.00, indicating strong upward momentum.
For further gains, the pair needs to break above the October 2023 high of 0.9244 to target the round-level resistance at 0.9300 and the March 16, 2023 high of 0.9342. On the downside, a move below the psychological support level of 0.9000 could see the pair retrace to the November 22 high of 0.8958, followed by the December 16 low of 0.8900.
USD/CHF weekly chart
