The USD/CHF currency pair remains steady after experiencing losses in the previous session, trading above 0.8650 during the Asian trading hours on Friday. This position is near its two-month peak of 0.8686, which was reached on Wednesday, reflecting the ongoing dynamics in the forex market.
Current Market Dynamics
The strength of the USD/CHF pair can be largely attributed to the robust performance of the US Dollar (USD). Market sentiment is shifting as expectations rise that the Federal Reserve (Fed) will adopt a less aggressive approach to interest rate cuts than previously anticipated. This positive sentiment for the Greenback is further amplified by uncertainties surrounding the upcoming US presidential election.
A recent Reuters/Ipsos poll indicates that Vice President Kamala Harris holds a marginal lead of 46% to 43% over former President Donald Trump in a six-day poll that concluded on Monday. Trump’s campaign continues to focus on economic revitalization, promising to build an economy that uplifts all communities across the United States.
Daily Digest: Key Market Movers
USD Dynamics: The USD is benefitting from changing perceptions about interest rate policies and political uncertainties surrounding the elections.
Political Landscape: Former President Trump has been vocal about his vision for the economy, while Harris’s rally in Georgia has garnered support from high-profile figures, including Bruce Springsteen and former President Obama.
Challenges for the Swiss Franc
On the Swiss side, the Swiss Franc (CHF) may face hurdles due to heightened expectations of another interest rate cut by the Swiss National Bank (SNB) at its upcoming meeting in December. The Swiss inflation rate has recently declined to 0.8% in September, marking a three-year low and down from 1.1% the previous month. This reduction in inflation raises the possibility of more accommodative monetary policy from the SNB, which could weigh on the CHF.
Despite these challenges, the Swiss Franc is likely to benefit from safe-haven flows amid ongoing geopolitical tensions, particularly concerning the situation in the Middle East. Traders are closely monitoring developments, including Israel’s response to Iran’s missile attack on October 1. Concurrently, US and Israeli officials are preparing to resume discussions about a potential ceasefire and the release of hostages in Gaza.
US Secretary of State Antony Blinken reiterated on Thursday that the United States does not support a prolonged Israeli campaign in Lebanon, while France is advocating for immediate diplomatic efforts and a ceasefire.
Technical Outlook: USD/CHF Analysis
From a technical standpoint, the USD/CHF pair is maintaining its position above 0.8650, indicating a potential consolidation phase after the recent gains.
Resistance and Support Levels:
Resistance: The pair faces resistance near the recent peak of 0.8686. A breakout above this level could signal further upside potential.
Support: Immediate support is observed around the psychological level of 0.8650, with additional support likely near 0.8620, the 50-day Exponential Moving Average (EMA).
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