The USD/CHF pair saw some buying interest around 0.8810 during the early European session on Tuesday, bolstered by a broadly stronger US Dollar (USD). Market participants are closely monitoring upcoming speeches from Federal Reserve officials Christopher Waller, Thomas Barkin, Neel Kashkari, and Patrick Harker later today, with the US Consumer Price Index (CPI) and Producer Price Index (PPI) data set to take center stage on Wednesday.
A key factor supporting the USD’s strength against the Swiss Franc (CHF) is the expectation that US economic policies under President-Elect Donald Trump—such as tax cuts, trade tariffs, and increased deficit spending—could lead to a fresh wave of inflation. This, in turn, may prompt the Federal Reserve to slow the pace of interest rate cuts, reinforcing the Greenback’s position against the Franc.
US Dollar Bulls Eye Inflation Data, DXY Hits Four-Month Highs
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, climbed to fresh four-month highs near 105.70, reflecting broader strength in the Greenback. Traders are now focusing on the release of the October CPI data on Wednesday, which could provide valuable clues about the Fed‘s future policy trajectory. A higher-than-expected inflation reading could further solidify expectations that the Fed will adopt a more cautious approach to rate cuts in the coming months, potentially boosting the USD further.
Swiss National Bank’s Cautious Stance on Rate Cuts
On the Swiss side, the Swiss National Bank (SNB) has tempered expectations of aggressive rate cuts. SNB Vice Chairman Antoine Martin stated on Monday that the central bank is not necessarily locked into further interest rate reductions in December. Martin emphasized that central banks should avoid locking themselves into forward guidance, as evolving economic conditions could make current forecasts outdated.
Market consensus expects the SNB to implement at least a 25 basis point cut from its current 1% policy rate at its December 12 meeting. However, Martin’s comments suggest that the central bank may adopt a more flexible approach, depending on how economic conditions unfold in the coming weeks.
Technical Outlook: USD/CHF Remains Bullish
From a technical perspective, the USD/CHF pair continues to hold its bullish momentum, supported by the broader strength of the US Dollar. The next immediate resistance for the pair is near the 0.8830 level, with a potential move towards the 0.8850 mark if the USD remains strong following the CPI and PPI releases.
On the downside, support for the pair is seen at 0.8800, with further backing around the 0.8750 zone. A break below these levels could signal a pullback, though the pair’s overall bullish bias remains intact as long as the USD maintains its strength.
As traders await key economic data, the USD/CHF pair’s direction will be shaped by developments in US inflation, Federal Reserve commentary, and expectations surrounding future SNB actions.
Related Topics:
