USD/CHF stays below the 0.9100 mark after the release of Swiss Real Retail Sales data.
FUNDAMENTAL OVERVIEW:
- USD/CHF gained as the US Dollar strengthened following the Federal Reserve’s hawkish shift in its policy outlook.
- Swiss Real Retail Sales rose by 0.8% YoY in November, falling short of the anticipated 1.2% and the previous 1.5% increase.
- The latest dot plot in the Fed’s Summary of Economic Projections suggests expectations for only two rate cuts in 2025.
USD/CHF remains stable after posting losses in the previous session, hovering around 0.9100 during the Asian trading hours on Monday. The pair saw limited movement following the release of Switzerland’s Real Retail Sales, which showed a 0.8% year-over-year increase in November, missing the expected 1.2% rise and the prior 1.5% gain. Traders will likely focus on the country’s December Consumer Price Index (CPI) and Foreign Currency Reserves, due on Tuesday.
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On Friday, the SVME Manufacturing Purchasing Managers Index (PMI) slightly declined to 48.4 in December, down from 48.5 in November, but it surpassed market expectations of 48.3.
The Swiss Franc (CHF), a well-known safe-haven currency, found support amid rising geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict. Last week, Russia launched a drone attack on Ukraine’s capital, Kyiv, early on New Year’s Day, resulting in two deaths, at least six injuries, and significant damage to buildings in two districts.
The USD/CHF pair gained strength as the US Dollar Index (DXY), which gauges the performance of the US Dollar (USD) against six major currencies, maintained its position near 109.00, near recent highs. On Friday, the US manufacturing sector continued its contraction in December, although slower, with the ISM Manufacturing PMI rising to 49.3 from 48.4 in November, surpassing the market expectation of 48.4.
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The US Dollar could strengthen further, as the Federal Reserve (Fed) is expected to pause its easing cycle during the January meeting after three consecutive rate cuts. The latest dot plot in the Fed’s Summary of Economic Projections shows policymakers anticipate the Federal Funds Rate reaching 3.9% by year-end, signaling expectations for only two rate cuts in 2025.
Fed officials have also indicated a more cautious stance on rate reductions for 2025. On Friday, Richmond Fed President Thomas Barkin emphasized that the benchmark policy rate should stay restrictive until there is more confidence that inflation will return to the 2% target. Furthermore, Fed Governor Adriana Kugler highlighted the delicate balance the US central bank faces as it seeks to slow down the pace of monetary easing this year.
USD/CHF TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CHF is trading within a up channel.
USD/CHF is moving above all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.9126
Immediate support level: 0.9021
HOW TO TRADE USD/CHF
After finding support at a higher time frame, the USD/CHF surged sharply upward, showing a strong upward movement. However, it has now encountered resistance and is reversing to the downside. Currently, the pair is retracing, but as long as it remains above the support zone, the price may continue to rise.
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