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USD to CHF Rate Supported by MAs After SNB Chair Dovish Take

The volatility in the CHF to USD rate has declined in the last 2 weeks, after USD/CHF climbed above 0.92 early this month but tumbled back to 0.90 lows which are holding as support for USD/CHF. buyers keep coming back, so we are keeping a bullish bias, going long on the US dollar against the Swiss Franc.

USD/CHF Chart H4 – The 100 SMA Continue to Act As Support

The USD/CHF pair experienced a notable uptrend earlier in May, breaking through resistance and surpassing the 0.92 level. However, this bullish momentum was short-lived, as the pair retreated below this level following the Federal Open Market Committee (FOMC) meeting and the release of lower-than-expected Non-Farm Payrolls (NFP) data.

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Despite the subsequent decline, the price found support near the 0.90 level, which coincided with the prior barrier zone, and was further reinforced by the 100-period Simple Moving Average (SMA) on the 4-hour (H4) chart. Since then, the USD/CHF pair has been trading within a relatively narrow range between 0.90 and 0.91, indicating a period of consolidation and indecision in the market. This range-bound movement suggests that neither buyers nor sellers have been able to establish dominance, resulting in a lack of clear direction for the pair in the short term.

Last night the Swiss National Bank chairman made some dovish comments, hinting at more rate cuts to come. The comments from the Swiss National Bank (SNB) Chairman reflect a cautious optimism regarding the current state of inflation and the economic outlook, which is bearish for the CHF, however markets are trading the USD right now. Here’s a breakdown of the key points:

Comments from the SNB Chairman

  1. Fight Against Inflation: The SNB Chairman indicates that efforts to combat inflation are well underway. This suggests that the central bank has taken proactive measures to address rising price levels, which is a primary concern for central banks around the world.
  2. Uncertainty Remains: Despite progress in combating inflation, the Chairman acknowledges that uncertainty persists. This likely refers to ongoing economic challenges, such as geopolitical tensions, supply chain disruptions, and the evolving impact of the COVID-19 pandemic. The SNB remains vigilant and adaptable in response to these uncertainties.
  3. Outlook for Swiss Inflation: The Chairman expresses optimism about the outlook for Swiss inflation, suggesting that conditions have improved. This could be attributed to various factors, including effective monetary policy measures, resilient economic performance, and favorable external conditions.

Overall, these comments suggest a balanced assessment of the economic situation by the SNB Chairman, highlighting both progress made and ongoing challenges that require careful monitoring and management. The SNB has already cut rates but it certainly sounds like there is more rate cuts from them coming up.

 

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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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