USD/CHF Sees Modest Retreat Amid Mixed Fed Signals and SNB Chairman’s Remarks

The USD/CHF pair takes a step back from its bullish run that commenced in mid-January, adjusting to near 0.8670 in Tuesday’s Asian trading session. Influencing the slight retreat is the dip in US Treasury yields, with 2-year and 10-year bonds yielding 4.38% and 4.09% respectively.

Despite this pullback, the US Dollar finds a semblance of support following hawkish statements from Federal Reserve officials. San Francisco’s Mary Daly and Atlanta’s Raphael Bostic have reiterated the Fed’s firm stance on inflation control, thereby underpinning the US Dollar’s strength.

These comments have countered the bearish pressure stemming from the yields, aiding the Greenback’s resilience.

The US Dollar Index (DXY) recedes slightly to the vicinity of 103.20, mirroring the cautious market sentiment propelled by geopolitical tensions. Additionally, a more favorable reading from the US Conference Board Leading Economic Index and the anticipation of the Richmond Fed Manufacturing Index are expected to shed light on the US economic landscape.

On the Swiss front, the Franc is under selling pressure after SNB Chairman Thomas Jordan highlighted the challenges posed by the CHF’s strength on inflation dynamics. While recent domestic price increases and consumer demand have been encouraging, the SNB remains vigilant, with its policy geared towards ensuring price stability.

Swiss Producer and Import Prices have seen a downtrend, which may deter the SNB from aggressive policy shifts. Nevertheless, the bank maintains a readiness to act to steer inflation towards its target range over the medium term.

USD/CHF Technical Outlook

The technical outlook for USD/CHF suggests consolidation, with the market awaiting a catalyst to resume the uptrend.

The bullish forecast is bolstered by the EMA50 and the completion of an inverted head and shoulders pattern, though sustaining above 0.8610 is crucial for attaining the bullish objectives set at 0.8740 and 0.8815.

Today’s trading range is expected to be between the 0.8610 support level and 0.8750 resistance, with the day’s trend projected to lean bullish.

USD/CHF Live Chart