The USD/CHF pair has recovered from its earlier losses and stabilized around 0.9160 in Tuesday’s European session, as investors adopt a cautious stance ahead of the upcoming US Consumer Price Index (CPI) data for December, set to be released this week. The market is closely monitoring the inflation report, which is expected to influence speculation about the Federal Reserve’s (Fed) future interest rate decisions.
Year-on-year headline inflation is anticipated to have risen to 2.8% in December, up slightly from 2.7% in November, while core inflation is expected to maintain a steady increase at 3.3%. The results will likely affect market expectations, with the CME FedWatch tool indicating a 69% chance that the Fed may reduce interest rates at some point this year.
The Swiss Franc (CHF) has been underperforming against the US Dollar for the past few months, and the Swiss National Bank (SNB) is expected to continue easing monetary policy to combat inflationary pressures. The SNB has already lowered its key borrowing rates to 0.5% in an attempt to support economic activity.
The USD/CHF pair is trading close to a 15-month high around 0.9200, supported by an upward slope in the 20-week Exponential Moving Average (EMA) near 0.8883. The 14-week Relative Strength Index (RSI) is also in the bullish range of 60.00-80.00, signaling strong upward momentum.
To target the next major resistance levels of 0.9300 and the March 2023 high of 0.9342, the pair would need to break decisively above the October 2023 high of 0.9244. On the downside, a move below the psychological support at 0.9000 could push the pair toward the November 22 high of 0.8958, followed by the December 16 low of 0.8900.
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