CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF takes a breather after two days of a winning streak.
• Swiss Franc could receive support from the improved 10-year Swiss bond yield.
• US Dollar made profits on the Fed Powell’s rejection of rate cut in March amid upbeat economic data.

USD/CHF trades lower after registering gains for consecutive two days, edging lower to near 0.8700 during the Asian session on Tuesday. The Swiss Franc (CHF) may be receiving support from the improved 10-year Swiss bond yield, standing at 0.93% by the press time. This movement in the bond yield could be influenced by global market sentiment after the recent comments from Federal Reserve Chair Jerome Powell, who indicated that a rate cut in March is premature.

In its final meeting of 2023, the Swiss National Bank (SNB) opted to keep its key interest rate unchanged at 1.75%, marking the conclusion of its recent tightening cycle. Consumer prices remained steady on a monthly basis, while the core rate experienced a slight increase. Projections for the current year indicate that inflation is expected to average below the 2.0% threshold. Given these considerations, there is a consensus expectation among analysts that the SNB might initiate its first rate cut in September 2024.

The US Dollar Index (DXY) takes a breather after registering gains in the previous two sessions. The DXY trades slightly lower around 104.30, which could be attributed to the weaker US Treasury yields. The 2-year and 10-year yields on US bonds stand at 4.43% and 4.12%, respectively, at the time of writing.

In January, the US ISM Services Purchasing Managers' Index (PMI) posted a reading of 53.4, surpassing both the anticipated figure of 52.0 and the prior month's 50.5. Furthermore, the ISM Services Employment Index rose to 50.5 from the previous reading of 43.8.

Federal Reserve Chairman Jerome Powell underscored the importance of vigilantly observing inflation's sustained movement toward the 2% core target. This stance had the effect of strengthening the US Dollar, providing support to the USD/CHF pair.

• USD/CHF continues to move on an upward trajectory after the blockbuster US Nonfarm Payrolls data.
• Fed’s Powell restated that initiating rate cuts in the March meeting may be premature.
• The Swiss National Bank is expected to initiate a rate cut in September 2024.

USD/CHF improved to 0.8680 during the Asian session on Monday, extending gains for the second straight session. The US Dollar (USD) received support as the market sentiment indicated that the Federal Reserve is unlikely to cut interest rates at March's meeting after the solid US employment figures released on Friday.

On Friday, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls added 353K jobs in January, surpassing the previous reading of 333K and exceeding the market consensus of 180K. Average Hourly Earnings (MoM) came in at 0.6% for January, exceeding the expected 0.3% and 0.4% reading from December. The Unemployment Rate remained unchanged at 3.7% in January against the market consensus of 3.8%.

Jerome Powell, the Chair of the US Federal Reserve (Fed), has restated that initiating rate cuts in the March meeting may be premature. He stressed the importance of approaching the timing of rate cuts cautiously, considering the current strength of the economy. Moreover, Austan Goolsbee, the President of the Chicago Federal Reserve (Fed) Bank, expressed on Friday that he does not view the robust US job growth in January as a reason to delay interest rate cuts. Instead, he sees it as reassurance that the labor market is resilient and not on the verge of weakening.

The most recent data on the Swiss Manufacturing Purchasing Managers Index (PMI) indicated a marginal improvement in production growth in Switzerland, falling short of market expectations. Despite a surge in Gross Domestic Product surpassing market consensus, there has been a dip in Swiss Real Retail Sales and Consumer Demand. As a result, there is a prevailing anticipation in the market that the Swiss National Bank (SNB) is likely to implement its inaugural rate cut in September 2024, in line with consensus expectations.

• USD/CHF extends its losses as the US Dollar loses ground on subdued US yields.
• Swiss Manufacturing PMI improved to 43.1 but fell short of the expected 44.5.
• US Treasury yields face challenges as the regional bank New York Community Bancorp is stressed in its commercial real estate portfolio.

USD/CHF loses ground for the third consecutive session, edging lower to near 0.8560 during the European trading hours on Friday. The downbeat labor data from the United States (US) weakened the US Dollar (USD), which in turn, acted as a headwind for the USD/CHF pair.

The Swiss Manufacturing Purchasing Managers Index (PMI) released by the Trade Association for Purchasing and Supply Management showed that production growth in Switzerland has slightly improved but failed to meet the market expectations. The index improved to 43.1 in January from the previous reading of 43.0, falling short of the expected 44.5 reading.

Recent economic events indicated a decline in Swiss Real Retail Sales and Consumer Demand, contrasting with a rise in Gross Domestic Product that exceeded market consensus. Looking ahead, projections for this year suggest that inflation will average below the 2% threshold. The consensus expectation is for the Swiss National Bank (SNB) to implement its first rate cut in September 2024.

The subdued US Treasury yields are adding pressure on the US Dollar (USD). The downward pressure on US Treasury yields followed reports from regional bank New York Community Bancorp, revealing increased stress in its commercial real estate portfolio.

Furthermore, the US Dollar (USD) faced downward pressure following the release of mixed economic data from the United States (US) on Thursday. Initial Jobless Claims for the week ending on January 26 increased to 224K, surpassing both the previous rise of 215K and the expected figure of 212K.

However, the ISM Manufacturing PMI improved, climbing to 49.1 from the prior reading of 47.1, surpassing the anticipated figure of 47.0 in January. More labor data, including US Average Hourly Earnings and Nonfarm Payrolls (NFP), is scheduled for release on Friday.

• USD/CHF gains ground after Fed Chair Powell dismissed the possibility of a rate cut in March’s meeting.
• Fed chose to maintain its existing interest rates as expected.
• SNB Jordan anticipated that Swiss inflation would remain below 2.0%.

USD/CHF edges higher to near 0.8620 during the Asian session on Thursday. Despite a setback in the US Dollar (USD) against the Swiss Franc (CHF) on Wednesday due to disappointing US employment data, a recovery ensued after Federal Reserve (Fed) Chair Jerome Powell dismissed the likelihood of a rate cut in the forthcoming March meeting. This decision was widely expected, given the Fed's choice to uphold the existing interest rates. Powell underscored the enduring presence of heightened inflation and emphasized the strong growth in economic activity.

Furthermore, the Federal Open Market Committee (FOMC) does not anticipate considering a reduction in the target range until it has acquired increased confidence that inflation is progressing consistently toward the 2.0 percent target. Although inflation has moderated over the past year, it is still elevated. The statement omits the reference to additional policy firming.

Swiss National Bank (SNB) Chairman Thomas Jordan addressed at a Business Journalists club on Tuesday. He stated that the expectation is for inflation to rise due to the Value Added Tax (VAT) increase and electricity prices, but it is anticipated to remain below 2.0%. This is the baseline scenario, and the projection for this year suggests that inflation will average below the 2.0% threshold. The consensus expectation is for the Swiss National Bank to implement its first rate cut in September 2024.

Swiss Real Retail Sales (YoY) declined by 0.8% against the expected growth of 0.9% in December. The Swiss consumer demand was fallen by 1.5% in November. Gross Domestic Product (MoM) for November rose to 0.2% from the flat 0.0% prior, exceeding the market consensus of 0.1% growth. Traders will observe the S&P Global Manufacturing PMI and SVME - Purchasing Managers' Index on Thursday.

• USD/CHF gains ground on positive sentiment ahead of Fed decision.
• Fed is expected to not adjust the current rate policy in its January meeting.
• Swiss Trade Balance reduced to 1,248 million in December from 3,833 million prior.

USD/CHF experiences upward movement for the second consecutive session on Wednesday, edging higher to near 0.8630 during the Asian session. This positive momentum is attributed to anticipation and support ahead of the Federal Reserve's (Fed) interest rate decision later in the day. Market participants seem to have priced in the expectation that the Fed will likely make no adjustments in January's meeting.

However, the CME’s FedWatch Tool is indicating a 43% probability of the Federal Reserve implementing the first rate cut in March. Furthermore, there is a 53% chance of a 25 basis points rate cut in May. These probabilities suggest that investors are positioning for potential changes in the Fed's monetary policy in the coming months, which could impact the USD/CHF pair.

On Tuesday, the US JOLTS Job Openings for December showed improvement, reaching 9.026 million compared to the previous figure of 8.925 million and surpassing the anticipated 8.7500 million. The US Housing Price Index (MoM) remained unchanged at 0.3% in November.

Investors are expected to closely watch the US ADP Employment Change data scheduled for release on Wednesday. This data is often considered a precursor to the more comprehensive US Nonfarm Payrolls report, set to be released later in the week.

The Federal Customs Administration of Switzerland released the monthly report for December's Imports, indicating a decrease to 17,551 million from the previous 20,454 million. Exports (MoM) also decreased to 18,798 million from the prior figure of 24,287 million, leading to a reduced Trade Balance of 1,248 million from 3,833 million.

Last week, SNB President Thomas Jordan expressed uncertainty about the Swiss National Bank's (SNB) stance on the persistent strength of the currency. Traders will be observing Wednesday's Real Retail Sales and the ZEW Survey to assess the overall health of the Swiss economy.

• USD/CHF could face downward pressure due to the downward US Treasury yields.
• An improved US balance sheet weighs on the US yields, undermining the US Dollar.
• Swiss Real Retail Sales and the ZEW Survey may provide cues on Swiss economic health on Wednesday.

USD/CHF attempts to retrace its recent losses, inching higher around 0.8620 during the Asian session on Tuesday. However, the US Dollar (USD) has faced a challenge against the Swiss Franc (CHF) due to the decline in US Treasury yields. The release of an improved US balance sheet has supported prices for US Treasury bonds, which, in turn, puts downward pressure on US yields.

Since October 2023, the decline in US yields has played a role in bolstering the sustainability of the US Treasury. Additionally, enhanced economic growth has resulted in improved tax receipts. The US Treasury Department has recently disclosed its intention to borrow $760 billion in the first quarter, marking a decrease from the initial estimate of $816 billion in October.

The US Dollar Index (DXY) snaps its two-day losing streak, which could be attributed to the risk aversion sentiment on the concern over the escalated tension in the Middle East. US President Joe Biden’s administration is anticipated to authorize military strikes in response to the recent drone attack on a US outpost in Jordan, resulting in the death of three US troops and injuries to at least 24.

Market observers will closely monitor Tuesday's releases of the Housing Price Index and Consumer Confidence figures, seeking additional insights into the market landscape following the scheduled Federal Open Market Committee (FOMC) statement on Wednesday, January 31.

Acknowledging the robust Swiss Franc's impact on inflation containment and challenges faced by domestic companies, SNB President Thomas Jordan expressed uncertainty about the Swiss National Bank's (SNB) stance on the persistent strength of the currency. Attention will be directed towards Wednesday's Real Retail Sales and the ZEW Survey to gauge the overall health of the Swiss economy.

• USD/CHF climbs to near 0.8600 as US Dollar recovers amid dismal market mood.
• Investors see first rate-cut from the Fed in May now against prior expectations for March.
• The Fed is expected to maintain status-quo for fourth straight time.

The USD/CHF pair discovers buying interest near the round-level support of 0.8600. The Swiss Franc pair bounces as investors rush for safe-haven assets amid volatility ahead of the Federal Reserve (Fed) monetary policy and deepening Middle East tensions.

S&P500 futures remains subdued in the European session, which indicates that investors have sidelined ahead of the Fed policy outcome. The US Dollar Index (DXY) jumps to near the crucial resistance of 103.70. 10-year US Treasury yields have dropped to near 4.10%.

Investors see the Fed keeping interest rates unchanged in the range of 5.25-5.50% for the fourth time in a row. Meanwhile, expectations for rate-cuts by the Fed have shifted to May’s monetary policy meeting from March as policymakers have been warning about the consequences of premature rate-reduction decision that could uplift core price pressures and dampen efforts yet made in bringing them down to near 3.9%.

USD/CHF struggles to advance above the 38.2% Fibonacci retracement (plotted from 3 October 2023 high at 0.9244 to 28 December 2023 low at 0.8333) at 0.8680. The 20-period Exponential Moving Average (EMA) near 0.8620 is providing support to the US Dollar bulls.

The 14-period Relative Strength Index (RSI) has shifted into 40.00-60.00 range from the bearish range of 20.00-40.00. Fresh buying momentum would emerge if the asset will shift into the bullish range of 60.00-80.00.

Going forward, a decisive break above intraday high of 0.8652 would drive the asset towards the round-level resistance of 0.8700 and January 23 high of 0.8728.

In an alternate scenario, a downside move below the psychological support of 0.8500 will expose the asset to January 5 low at 0.8455, followed by 27 December 2023 low at 0.8408.

USD/CHF daily chart

• USD/CHF loses ground on risk aversion sentiment.
• US Dollar remains stable despite downbeat US bond yields.
• Market expects that the Fed will initiate a rate-cut cycle in March.

The USD/CHF continues to lose ground for the second straight session, edging lower to near 0.8640 during the Asian hours on Monday. The Swiss Franc (CHF) appears to be in demand against the US Dollar (USD), driven by an increase in risk aversion sentiment. This demand for the CHF could be attributed to heightened tensions in the Middle East, as geopolitical uncertainties often lead investors to seek safe-haven currencies like the Swiss Franc.

There is uncertainty regarding the Swiss National Bank's (SNB) stance on the persistent strength of the Swiss Franc. Despite concerns about the CHF's strength, it is not expected that the SNB will intervene in the foreign exchange market by purchasing foreign currency to restrain the appreciation of the CHF.

The US Dollar Index (DXY) maintains stability around 103.50, with subdued 2-year and 10-year US Treasury yields at 4.34% and 4.13%, respectively, at the time of writing. Despite the release of moderate US Core Personal Consumption Expenditures Price Index (PCE) data on Friday, the US Dollar failed to find support. The December Core PCE reported a 0.2% monthly increase, meeting expectations and surpassing the previous reading of 0.1%. However, the yearly Core PCE rose by 2.9%, falling short of the expected 3.0% and the previous reading of 3.2%.

As inflation shows signs of cooling off, investors are anticipating the possibility of the Federal Reserve (Fed) implementing policy easing. The CME FedWatch Tool suggests that futures traders have priced in a 53% probability of the Fed cutting interest rates for the first time in this cycle during the March meeting. However, the upcoming Federal Open Market Committee (FOMC) statement on January 31 is expected to maintain the Fed Funds rate unchanged.

Traders are likely to closely monitor key economic indicators, including Tuesday's releases of the US Housing Price Index and Consumer Confidence figures to gain additional market insights. On the Swiss docket, Wednesday's Real Retail Sales and the ZEW Survey will be eyed to assess the overall health of the Swiss economy.

• USD/CHF could gain ground due to the hawkish sentiment surrounding the Fed.
• US GDP Annualized (Q4) printed a 3.3% figure against the expected 2.0% and 4.9% prior.
• Swiss policymakers will likely observe Real Retail Sales and the ZEW Survey to decide on the SNB's (SNB) monetary policy.

USD/CHF consolidates near 0.8670 during the Asian trading hours on Friday. The US Dollar (USD) appreciated against the Swiss Franc (CHF) following the release of Gross Domestic Product (GDP) data from the United States. The better-than-expected GDP figures in the fourth quarter might have decreased the likelihood of the Federal Reserve’s (Fed) reducing policy rates in the March meeting, which in turn, underpins the USD/CHF pair.

The US Gross Domestic Product Annualized (Q4) reported a reading of 3.3%, surpassing the previous reading of 4.9% and exceeding the market consensus of 2.0%. Additionally, the US Gross Domestic Product Price Index (Q4) decreased to a growth of 1.5% from the previous growth of 3.3%. Surprisingly, US Initial Jobless Claims for the week ending on January 19 reduced to 214K, contrary to the expected increase of 200K from the prior 189K. Furthermore, the market will be closely watching the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday for further insights into US economic conditions.

The appreciation of the Swiss Franc (CHF) is beneficial for the Swiss National Bank (SNB) in terms of keeping inflation in check. However, there are uncertainties about whether the central bank is comfortable with the persistent strength of the CHF. Earlier this week, SNB President Thomas Jordan acknowledged that the robust Swiss Franc has played a role in capping inflation but has also posed challenges for domestic companies.

Despite concerns about the CHF's strength, the SNB is not expected to intervene in the open market by purchasing foreign currency to limit the advance of the Swiss Franc. The central bankers will likely monitor key economic indicators such as Real Retail Sales and the ZEW Survey to assess the health of the Swiss economy. These indicators will be instrumental in helping policymakers decide on the Swiss National Bank's (SNB) monetary policy.

• USD/CHF rebounds despite the decline in the US bond yields.
• US GDP Q4 is expected to ease at 2.0% from the previous reading of 4.9%.
• Traders await next week’s Swiss Real Retail Sales and the ZEW Survey to gauge the Swiss economic landscape.

USD/CHF moves lower to near 0.8650 during the Asian session on Thursday, retracing its losses registered in the previous session. The US Dollar Index (DXY) maintains a steady position despite the downbeat US Treasury yields, which underpins the USD/CHF pair. The DXY hovers near 103.30 with the 2-year and 10-year yields on US bond coupons standing at 4.36% and 4.14%, respectively, by the press time.

However, the US Dollar (USD) was challenged due to risk-on market sentiment, avoiding the positive PMI data from the United States (US). The market sentiment is influenced by expectations related to the Fed's monetary policy, and traders are adjusting their positions accordingly. Additionally, the preliminary US Gross Domestic Product Annualized report is set to be released on Thursday, with expectations of a reading of 2.0% in the fourth quarter, compared to the previous reading of 4.9%.

If the actual US GDP reading aligns with market expectations, it could increase the likelihood of the Fed reducing policy rates in the March meeting. As reflected in the CME's FedWatch tool, the market sentiment suggests that bets on a March rate cut from the Fed have dropped to below 40%, a substantial decrease from around 80% recorded just a month ago.

Earlier this week, Swiss National Bank (SNB) President Thomas Jordan mentioned that the robust Swiss Franc (CHF) has played a role in capping inflation. In addition, he expressed confidence in the economy, stating that economists are confident that there won’t be a recession. However, Jordon emphasized that while a recession is not expected, the outlook points to weak growth.

Next week, economic indicators like Real Retail Sales and the ZEW Survey will be monitored by traders to gauge the health of the Swiss economy and anticipate potential changes in SNB’s monetary policy.

• USD/CHF strives to snap its winning streak as US Treasury yields decline.
• Markets bets on Fed rate cuts in March have slowed down.
• Fed’s Bullard has anticipated the central bank to initiate policy rate cuts as early as March.
• SNB President Thomas Jordan noted that the robust CHF has played a role in capping inflation.

USD/CHF makes an effort to halt its winning streak that began on January 11. The USD/CHF pair trades lower near 0.8690 during the Asian session on Wednesday. This could be attributed to a minor decline in the US Dollar due to the downbeat US Treasury yields.

The US Dollar Index (DXY) edges lower to near 103.40 with the 2-year and 10-year yields on US bond coupons standing at 4.32% and 4.11%, by the press time. Market sentiment suggests a decreased likelihood of a rate cut by the Federal Reserve (Fed) in March. However, former St. Louis Fed President James Bullard has expressed a contrasting view, anticipating the Fed to initiate interest rate cuts even before inflation reaches 2.0%, with the possibility of cuts as early as March.

Moreover, there is full pricing in of a 25 basis point (bps) cut in May, and the chances of a 50 bps cut stand at 50%. Traders are likely eagerly awaiting the release of the S&P Global Purchasing Managers Index (PMI) data from the United States on Wednesday.

Swiss National Bank (SNB) President Thomas Jordan addressed the strong Swiss Franc (CHF) during an event in the Swiss town of Brig on Tuesday. He noted that the robust Swiss Franc has played a role in capping inflation. Additionally, Jordan expressed confidence in the economy, stating, "Economists are confident that there won’t be a recession, and we are also confident, otherwise we would forecast one." He emphasized that while a recession is not expected, the outlook points to weak growth.

In the context of economic indicators, the Federal Statistical Office of Switzerland reported last week that the decline in Producer and Import Prices decelerated in December compared to the fall observed in November. Looking ahead, traders are eagerly anticipating the release of Real Retail Sales and the ZEW Survey – Expectations in the coming week. These releases are expected to provide further insights into the trajectory of the Swiss National Bank's interest rates.

• USD/CHF pulls back as the US Dollar faces the challenge of lower US Treasury yields.
• US Dollar might have cheered the hawkish remarks from the Fed’s officials.
• The risk aversion sentiment contributed support to underpinning the Greenback.
• Swiss Franc experienced selling pressure on SNB Jordan’s concern over inflation.

USD/CHF snaps its winning streak that began on January 11, edging lower to near 0.8670 during the Asian session on Tuesday. The US Dollar (USD) faces the challenge of lower US Treasury yields. The 2-year and 10-year yields on US bond coupons stand at 4.38% and 4.09%, respectively, at the time of writing.

However, the Greenback received upward support following hawkish comments from US Federal Reserve (Fed) members. San Francisco Fed President Mary Daly expressed the view that the central bank still has significant work to do in achieving the goal of bringing inflation back down to the 2.0% target. Additionally, Atlanta Fed President Raphael Bostic emphasized his openness to adjusting his outlook on the timing of rate cuts, highlighting the Fed's commitment to a data-dependent approach. These statements have contributed to a boost in support for the US Dollar.

The US Dollar Index (DXY) inches lower to near 103.20. The demand for the US Dollar is being driven by risk aversion sentiment, which is likely associated with the heightened geopolitical situation in the Middle East. Moreover, the US Conference Board Leading Economic Index improved to -0.1% in December from -0.5%, surpassing expectations for an improvement to -0.3%. Looking ahead, the Richmond Fed Manufacturing Index for January will be released later in the North American session, providing further insights into the state of the US economy.

The Swiss Franc (CHF) experienced selling pressure after Swiss National Bank (SNB) Chairman Thomas Jordan voiced concerns about the potential impact of the CHF's strength on the SNB's ability to keep inflation above zero in the Swiss domestic economy. Recent economic indicators have shown a slight increase in Swiss consumer prices in December and an improvement in consumer demand in November. These factors may influence the SNB's decision-making in the upcoming meeting.

However, Swiss Producer and Import Prices (YoY) declined in December following the November decline. These more moderate figures could potentially dissuade the Swiss National Bank from adjusting its monetary policy. In the last policy update from the SNB in December, they expressed a commitment to adjusting monetary policy if needed to maintain inflation within the range consistent with price stability over the medium term.

• USD/CHF moves on an upward trajectory after hawkish remarks from the Fed members.
• Fed’s Mary Daly stated that the central bank has substantial work in achieving the 2.0% inflation target.
• Swiss Franc continues to lose ground after SNB Jordan’s warning on appreciated CHF.

USD/CHF could extend its winning streak that began on January 11, trading near 0.8680 during the Asian hours on Monday. However, the US Dollar (USD) could receive downward pressure as the market participants expect that the US Federal Reserve (Fed) might implement more significant policy rate reductions in 2024 compared to other major central banks worldwide.

However, the hawkish comments from Federal Reserve (Fed) members may serve to mitigate the losses of the US Dollar. San Francisco Fed President Mary Daly, in her remarks on Friday, conveyed the view that the central bank has substantial work ahead in achieving the goal of bringing inflation back down to the 2.0% target. Furthermore, Atlanta Fed President Raphael Bostic emphasized his willingness to adjust his outlook on the timing of rate cuts, underscoring the Fed's commitment to a data-dependent approach.

The Swiss Franc (CHF) faced selling pressure after Swiss National Bank (SNB) Chairman Thomas Jordan warned last week regarding the appreciating trend of the Swiss Franc (CHF). Speaking at the World Economic Forum (WEF) in Davos, Jordan expressed concerns about the potential impact of the Swiss Franc's strength on the SNB's ability to maintain inflation above zero in the Swiss domestic economy.

The Federal Statistical Office of Switzerland has reported that the Producer and Import Prices (YoY) declined by 1.1% in December. Although this is a decrease, it is slightly less than the previous decline of 1.3%. On a monthly basis, the data showed a decrease of 0.6%, aligning with expectations. With no new data on the Swiss economic calendar this week, traders are anticipated to await the release of Real Retail Sales and the ZEW Survey – Expectations next week for further insights into the economic landscape of Switzerland.

• The CHF is broadly lower on the week, sending USD/CHF into a fresh six-week high.
• Switzerland Producer and Import Prices slipped further in December.
• SNB’S Jordan: appreciating Franc threatens Swiss inflation stability.

The Swiss Franc (CHF) slid further on Friday, extending recent losses as the market walks back a massive dogpile into the Swiss currency. The USD/CHF has climbed around 4.5% from December’s late low of 0.8332, a 12-year low for the pair.

Switzerland enjoys an economic environment massively different from its immediate European neighbors, with inflation already well within the Swiss National Bank’s (SNB) 2% maximum target and a stubbornly-healthy domestic economy.

The CHF gained significant value through 2023, climbing nearly 18% bottom-to-top against the US Dollar (USD) from 2022’s Q3 USD/CHF peak of 1.1047. With the popular CHF outrunning valuations and hampering the SNB’s ability to fine-tune policy using foreign currency reserves, the SNB flashed a warning to broader markets recently that if the CHF continues to appreciate, it will begin to transfer disinflationary pressure directly into the Swiss economy.

Having battled a disinflation cycle in the past, the SNB is in no rush to find itself mired in the same scenario again. Markets have apparently heeded SNB Chairman Thomas Jordan’s call for the time being, setting the USD/CHF on pace for its single-best weekly performance since late 2022.

USD/CHF Technical Outlook

The US Dollar is up around 1.85% against the Swiss Franc this week, climbing from Monday’s early bids near 0.8525, tapping the 0.8700 handle on Friday heading into the week’s closing bell.

The USD/CHF is set for its first technical challenge since finding the floor in late December, with the pair pushing directly into technical resistance from the 50-day Simple Moving Average (SMA) in the back half of the week’s trading.

A further technical ceiling is priced in at the 200-day SMA near 0.8850, with near-term technical barriers at the 0.880 handle where the pair last caught a swing high.

USD/CHF Hourly Chart

USD/CHF Daily Chart

• The USD remains steady near one-month highs, consolidating gains after a six-day rally.
• Comments by SNB Chief Thomas Jordan complaining about CHF strength are weighing on the Swissie.
• A moderate risk appetite is holding the USD back on Friday.

The US Dollar is consolidating gains near omne-month highs against the ASwiss Fran. The comments by SNB Chief, Thomas Jordan, suggesting that the strength of the Swiss Franc will determine the bank’s monetary policy decisions, is acting as a headwind for any significant CHF recovery.

The US Dollar remains buoyed with investors tempering rate-cut bets

In the US, the stronger-than-expected Jobless Claims and Retail Sales data have contributed to cool market hopes of early and aggressive Fed cuts in 2024, which has fuelled the US Dollar across the board.

Beyond that, an array of Federal Reserve policymakers have hit the wires, downplaying expectations of interest rate cuts in the coming months. Atlanta Fed President Raphael Bostic affirmed on Thursday that he does not expect rate cuts until the third quarter of the year.

The Dollar, however, is trading without a clear direction on Friday. A brighter market sentiment, and some profit-taking, as we head into the weekend, might be weighing the Greenback Later today the Michigan Consumer Sentiment Index and a speech by San Francisco Fed President, Mary Daly, might give a fresh push to the USD. 

USD/CHF Technical Analysis

The USD maintains its bullish structure intact after breaching the 38.2% Fibonacci retracement of the late 2023 decline, at 0.8675. The next targets are now  0.8720 and the 50% Fib retracement, at 0.8780 although the overbought levels on intra-day charts suggest that the current consolidation might extend.

Support levels are 0.8670 and 0.8635.

Technical levels to watch

• USD/CHF continues to gain ground after nervous comments from the SNB Chairman.
• SNB Chairman Thomas Jordan is concerned that excessive appreciation of CHF could drive inflation below zero.
• US Dollar gained ground on the diminished possibility of Fed rate cuts in March.

USD/CHF seems to continue its winning streak that began on January 11. On Thursday, Swiss National Bank (SNB) Chairman Thomas Jordan issued a warning about the Swiss Franc's (CHF) appreciating trend. Jordan expressed concerns at the World Economic Forum (WEF) in Davos about its potential impact on the SNB's ability to maintain inflation above zero in the Swiss domestic economy. These remarks have contributed to the USD/CHF pair's upward trajectory, with trading slightly higher around 0.8680 during the Asian session on Friday.

As the Swiss Franc experienced rapid appreciation towards the end of 2023, the SNB is sounding the alarm, emphasizing that excessive appreciation could pose a threat to the Swiss economy. A strengthening CHF has the potential to drive inflation lower swiftly. Market participants await Swiss Producer and Import Prices to gain further impetus on consumer price inflation in Switzerland.

The US Dollar Index (DXY) remains steady after recent gains with a positive bias to continue its winning streak on the back of upbeat US Treasury yields. The DXY hovers around 103.40 with the 2-year and 10-year yields on US bond coupons standing at 4.36% and 4.16%, respectively, at the time of writing.

On Thursday, positive economic indicators from the United States (US) provided further support to the upward momentum of the US Dollar, diminishing the likelihood of early interest rate cuts by the Federal Reserve (Fed) in March. In addition to the economic data, Federal Reserve Bank of Atlanta President Raphael Bostic made statements on Thursday during an event at the Atlanta Chamber of Commerce. Bostic noted that the base case for the Fed is to consider rate cuts in the third quarter, but he also kept the possibility open for earlier initiation of the rate cut cycle, contingent on inflation figures.

Traders are anticipated to closely monitor the US preliminary Michigan Consumer Sentiment Index, with expectations of improvement in January, as it may provide further insights into the market sentiment and the potential trajectory of the Fed’s monetary policy.