The USD/CHF pair weakened to 0.9120
The USD/CHF pair weakened to 0.9120 during the early European session on Tuesday, driven by selling pressure on the Greenback. This decline is occurring amidst a cautious market sentiment that continues to support the Swiss Franc (CHF) ahead of the Gross Domestic Product (GDP) data releases from both Switzerland and the United States, scheduled for Thursday.
Recent developments have added to the bearish sentiment for the USD/CHF pair. The hawkish tone from Federal Reserve (Fed) officials, highlighted in the minutes from their recent meeting, combined with hotter-than-expected US inflation data and robust PMI figures, has fueled speculation that the Fed will delay interest rate cuts this year. According to the CME FedWatch tool, financial markets are currently pricing in nearly a 50% chance that the Fed will maintain its rates in September. Persistent inflation in the US has led Fed policymakers to stress the necessity of keeping rates higher for a longer period to ensure inflation trends towards the 2% target. This stance could potentially boost the Greenback in the short term, providing some upward momentum for the USD/CHF pair.
Investors are now turning their attention
Investors are now turning their attention to the upcoming release of the Personal Consumption Expenditures (PCE) index on Friday for further direction. The US headline PCE is anticipated to increase by 0.3% month-on-month and 2.7% year-on-year in April. The Core PCE, which is the Fed’s preferred measure of inflation, is also expected to rise by 0.3% month-on-month and 2.8% year-on-year in April. Should the inflation data come in hotter than expected, it could further strengthen the USD against the CHF.
On the Swiss side, the cautious market sentiment
On the Swiss side, the cautious market sentiment and ongoing geopolitical tensions in the Middle East are likely to drive safe-haven flows into the CHF. Reports from Gazan officials on Monday indicated that an Israeli airstrike resulted in a fire that killed 45 people in a tent camp in the city of Rafah. Global leaders have called for the enforcement of a World Court order to halt Israel’s attacks, as reported by Reuters. These geopolitical tensions are contributing to the demand for safe-haven assets like the CHF. Additionally, the Swiss GDP data, expected to be released on Thursday, is projected to show a quarter-on-quarter expansion of 0.3% in Q1, with an annual growth rate of 0.1% for the same period. A positive GDP reading could further support the CHF in the near term.
USD/CHF Technical Overview
As of the latest data, the USD/CHF pair is trading at 0.9120, reflecting a daily change of -0.0017 or -0.19% from the daily opening price of 0.9137.
Technical Indicators
- Daily SMA20: 0.9099
- Daily SMA50: 0.9076
- Daily SMA100: 0.8903
- Daily SMA200: 0.8884
Key Levels
- Previous Daily High: 0.9154
- Previous Daily Low: 0.9132
- Previous Weekly High: 0.9158
- Previous Weekly Low: 0.9079
- Previous Monthly High: 0.9195
- Previous Monthly Low: 0.8998
Fibonacci Levels
- Daily Fibonacci 38.2%: 0.9141
- Daily Fibonacci 61.8%: 0.9146
Pivot Points
- Daily Pivot Point S1: 0.9129
- Daily Pivot Point S2: 0.9120
- Daily Pivot Point S3: 0.9107
- Daily Pivot Point R1: 0.9150
- Daily Pivot Point R2: 0.9163
- Daily Pivot Point R3: 0.9171
These technical indicators and key levels provide critical insights for traders. The 20-day, 50-day, 100-day, and 200-day Simple Moving Averages (SMAs) are all below the current price, suggesting a potential bearish trend. The Fibonacci retracement levels offer potential points of support and resistance, indicating where the pair might encounter buying or selling pressure.
The geopolitical landscape, coupled with the macroeconomic indicators from both the US and Switzerland, will continue to influence the USD/CHF pair’s movement. Traders and investors should keep a close eye on the unfolding events and the upcoming economic data releases, as these will provide further cues on the pair’s direction. The interplay between the Fed’s monetary policy stance and the safe-haven appeal of the Swiss Franc amidst geopolitical tensions will be crucial in determining the near-term trajectory of the USD/CHF pair.
