The USD/CHF pair is trading near the 0.8900 level after pulling back from a four-month high
FUNDAMENTAL OVERVIEW:
- The USD/CHF pair has retreated from a four-month high of 0.8917, recorded on Thursday.
- Fed Chair Jerome Powell highlighted the strong performance of the US economy, which has supported the gradual lowering of interest rates.
- Meanwhile, the Swiss Franc faces potential headwinds as expectations of a rate cut by the Swiss National Bank (SNB) in December increase, which could pressure the currency further.
USD/CHF has paused its five-day rally, trading around 0.8900 during Friday’s Asian session after retreating from a four-month high of 0.8917 reached on Thursday. This pullback appears to be a correction in the US Dollar (USD) following comments from Federal Reserve (Fed) Chair Jerome Powell, who noted the US economy’s “remarkably good” performance, which may allow for gradual interest rate cuts.
Federal Reserve Chair Jerome Powell stated that the recent performance of the US economy has been “remarkably good,” providing the Fed with room to gradually reduce interest rates. Meanwhile, Richmond Fed President Thomas Barkin acknowledged the progress made but emphasized that more work is needed to maintain economic momentum.
The downside for the USD/CHF pair may be capped, as the Swiss Franc (CHF) could face further weakening due to growing expectations of an interest rate cut by the Swiss National Bank (SNB) in December. This speculation stems from Switzerland’s inflation rate dropping to 0.6% in October, its lowest in over three years, signaling that inflation is well under control.
In an interview published on Monday, SNB Vice Chairman Antoine Martin clarified that the Swiss National Bank (SNB) is not committed to further interest rate cuts in December, despite earlier signals that reductions might be considered to address inflation. This shift in stance could affect market expectations regarding future monetary policy moves.
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 Bulling Zone, while the Stochastic oscillator suggests Neutral trend.
Immediate Resistance level: 0.8921
Immediate support level: 0.8796
HOW TO TRADE USD/CHF
USD/CHF experienced a decline initially, but after forming support, it reversed sharply to the upside, following a higher-high structure. The pair has now broken through its key resistance level and is trading above it. Following this strong upward movement and breakout, USD/CHF may retest its support zone. If it holds above this level, it could continue its upward trajectory.