Where Is USD/CHF Headed After Inflation Picks Up Again?

Posted Monday, June 5, 2023 by
Skerdian Meta • 1 min read

USD/CHF has been in a bearish trend since reaching its highs in October last year. Upward bounces in the pair have been short-lived, indicating a continuation of the downward movement. We anticipated that these bounces would fail to develop into sustained upward swings, limited to 3, 7, or 11 swings.

During the first quarter, we did witness a retracement as the USD made some recovery. However, this retracement was halted at the 100-period Simple Moving Average (SMA) represented by the green line on the daily chart. This provided an opportunity for sellers to add to their short positions. Subsequently, the decline resumed, and USD/CHF fell to around 0.88, the lowest level since January 2021.

USD/CHF Daily Chart – The 100 SMA Rejected the Price

The highs keep getting lower on the daily timeframe

After finding support at this bottom level, the pair initiated a rally towards the resistance level at 0.90. This upward movement was triggered by positive US economic indicators in the past two weeks, which exceeded expectations. As a result, the market reevaluated its outlook on future interest rate probabilities by the Federal Reserve (Fed).

The price broke above the 20 SMA (gray) and the 50 SMA (yellow), reaching 0.9150, but the 100 SMA (green) stopped the climb last week. This moving average has been acting as resistance, so we might see the bearish trend resume again on this pair. The inflation report from Switzerland was released earlier today, showing a return to growth in May after falling flat in April.

Switzerland May CPI Inflation Report



USD/CHF Live Chart

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