USD/CHF Retests Resistance Despite Stronger Swiss Inflation
USD to CHF has been bullish for about two months, gaining 550 pips, however, it has been finding it hard to push to 0.90, as the 200 daily SMA is acting as resistance, rejecting the price twice. However, February inflation increased as today’s report showed, beating expectations, but the sentiment turned negative for the CHF, which has lost 50 pips.
USD/CHF Daily Chart – The 200 SMA Rejecting the Price
Today’s February Consumer Price Index (CPI) from Switzerland was highly anticipated, particularly after the significant dovish reaction following the soft inflation data for January which was expected to jump by 0.6% but came at 0.2% MoM (Month on Month). The market priced in a 60% chance of a 25 basis point rate cut in March following the disappointing data from January. February’s CPI year-on-year (YoY) was expected to decline further to 1.1% from January’s reading of 1.3%.
Today’s CPI figures were closely monitored, especially because they included the most recent estimate of rental price pressures. Previous statements from Swiss National Bank (SNB) Chairman Jordan hinted at modest inflationary pressure from rents, with expectations of an acceleration in prices in January. Given the volatility often associated with January data, February’s statistics were examined thoroughly for any indications that the previous print was not representative of the overall pricing backdrop. Therefore, any divergence from expectations in the February CPI data was expected to have significant implications for monetary policy decisions and market sentiment towards the Swiss franc.
Swiss February Consumer Price Index Inflation Report
- Swiss CPI Month-over-Month (MoM) came in at 0.6%, surpassing the forecast of 0.5% and showing an improvement from the previous month’s reading of 0.2%.
- On a year-over-year (YoY) basis, Swiss CPI was reported at 1.2%, slightly higher than the forecast of 1.1%, although it declined from the previous reading of 1.3%.
Overall, the inflation report indicates a modest increase in consumer prices in Switzerland compared to expectations. This data should have influenced positively market sentiment regarding the Swiss franc and expectations for monetary policy adjustments by the Swiss National Bank, but the market has turned against the CHF, which is falling across the board.
USD/CHF Live Chart
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