USD/CHF Price Outlook: 0.79 Zone Holds as Markets Eye Key US Data
During the European session, USD/CHF pretty much stabilised around 0.7950, bouncing back a bit after taking a hit the session before...
Quick overview
- USD/CHF stabilized around 0.7950 after a previous decline, as the US dollar finds temporary support ahead of key economic data.
- Recent US inflation figures indicate easing pressures, complicating dollar predictions and leading to speculation about potential interest rate cuts by the Federal Reserve.
- The Swiss Franc is benefiting from a strong trade surplus, but uncertainty remains regarding the Swiss National Bank's future interest rate policy.
- Technical analysis shows USD/CHF is compressing between support and resistance levels, with no clear momentum in either direction.
During the European session, USD/CHF pretty much stabilised around 0.7950, bouncing back a bit after taking a hit the session before. The bounce comes as the US dollar gets a bit of a breather ahead of the University of Michigan Consumer Sentiment Index release, which is closely watched for any clues on household confidence and consumer spending.
The recent US inflation figures have definitely made dollar predictions a bit tricky. We saw headline CPI come in at 2.7% in November, below expectations, and core inflation eased back to its slowest pace since 2021. The inflation figures suggest the pressures are easing, even though policymakers are being super cautious.
The markets are also having to deal with the fallout from President Donald Trump’s comments about the next Federal Reserve chair. This has pushed the speculation that the Fed might start cutting interest rates, and that’s given some people the idea that the Fed’s policy stance could change over time. For now, though, that’s capping any aggressive move up for the dollar, even as it retains some of its defensive appeal.
Swiss Franc Finds Support From Trade Balance
Over in Switzerland, the franc is getting quite a boost from its solid trade balances. We just got the November numbers, and the trade surplus is CHF 3.84 bn, the largest since August. Exports were up, and imports were down, which is what’s driving it. Imports of chemicals and pharmaceuticals dipped a bit.
But the big unknown remains the Swiss National Bank’s stance – will they go back to negative rates or not? Until they give clearer guidance on this, the franc is likely to trade cautiously rather than make any big moves.
USD/CHF Technical Picture Shows Compression
On the 4-hour chart, USD/CHF is trading around 0.7947 and is holding just above rising wedge support after a bit of a slide. Price is still capped below that one trend line from the high in Nov, so the overall bias is still looking a bit down despite this latest stabilisation.
The candles were small, and the wicks were mixed, which suggests there really wasn’t that much conviction going on. They are compressing between 0.7927 support and 0.7988 resistance, with the 50-day EMA at 0.7971 having dropped below the 100-day EMA at 0.7991, so the immediate downward pressure is still in play. RSI is stuck around 45, which shows no real momentum and no oversell either.
If the pair breaks below 0.7927, then 0.7880 comes into play, and if it gets back above 0.7990, there’s a chance it could push towards 0.8035. But at the moment, USD/CHF looks like a bit of a wait-and-see affair.
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