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USD/CHF Heading for 0.90 After Bullish Break on Softer Swiss Inflation

The trend has shifted in USD/CHF since late December

USD/CHF has been bullish since late December gaining more than 5 cents, and yesterday we saw another jump after a lower January Swiss inflation rate and stronger US CPI inflation readings back to back. That propelled USDCHF another 140 pips higher yesterday, sending it above resistance, with the next target at 0.90.

The lower Swiss inflation figure resulted in a 60 pip dive in the Swiss Franc currency, which sent USD/CHF above the 100 daily SMA (green) at 0.8770, which was acting as resistance for several days, then came the US CPI report which sent it another 80 pips higher pushing above the 200 daily SMA (purple) this time, which stood at 0.8845. This comes as traders have revised their expectations for the SNB to decrease interest rates, probably starting in March, following the dovish shift in the rhetoric from European Central Bank officials in recent weeks.

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The inflation numbers caught everyone by surprise a little. In January, Switzerland’s Consumer Price Index (CPI) rose by 1.3% year-on-year, falling short of the expected 1.7%. The previous reading from December stood at 1.7%, so expectations were for stagnation. Meanwhile, the Core CPI, which excludes the volatile food and energy prices, increased by 1.2% year-on-year, compared to the previous reading of 1.5%.

Switzerland January CPI  Data from the Federal Statistics Office – 13 February 2024

  • January CPI  YoY +1.3% vs +1.7% expected
  • December CPI YoY was +1.7%
  • Core CPI YoY for January +1.2%
  • Core CPI YoY for December was +1.5%

The Swiss Franc (CHF) has shown strength in 2023, appreciating by approximately 10%. However, in 2024, USD/CHF is experiencing a corrective upward movement which will likely send it to 0.90 s00n. This adjustment could be attributed to the fact that the Federal Reserve has not yet decided to start lowering interest rates, while on the other hand, traders’ expectations for a dovish shift in Swiss monetary policy have increased after yesterday’s soft CPI inflation figures. Now moving averages should turn into support on the daily chart.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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