USD/CHF Facing Strong Resistance at the 20 SMA After Inflation and Retail Sales Release
USD/CHF started to plummet in early October, as the tensions in the Middle East escalated and safe havens began to gain attention, and sellers took control in early October. Then the USD started retreating lower as the FED turned dovish, signaling rate cuts in 2024 which put further pressure in this pair, sending it to 0,8330s by the end of 2023, after the last FOMC meeting.
In December the decline picked up in this pair as the Personal Consumption Expenditure price index (PCE) which is the Fed’s favored gauge of inflation showed another decline for November. The odds for earlier rate cuts by the FED skyrocketed. Markets anticipated around 160 basis points of cuts in 2024 and predicted the Fed’s first rate reduction to come in March, followed by another in May, and then betting on four more cuts. However, the odds of rate cuts declined to 120-130 bps and US Treasury yields turned higher, helping the USD make some gains last week.
However, buyers are facing the 20 SMA (gray) on the daily chart now which acted as a resistance on Friday. If the bullish momentum continues for USD/CHF , buyers should push the price above this moving average, otherwise, we’ll see a reversal and the bearish trend will resume. Earlier today we had the retail sales and CPI inflation reports from Switzerland.
Swiss December CPI Inflation Report
- December CPI YoY +1.7% vs +1.5% expected
- November CPI YoY was +1.4%
- Core CPI YoY +1.5%
- Prior core CPI YoY was +1.4%
Both the headline and core annual inflation readings rose slightly in December, putting the SNB on guard against loosening monetary policy anytime soon. However, as long as consumer prices remain below 2%, they should be able to continue their current policy position.
USD/CHF Live Chart
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