USD/CHF continues to decline amid US inflation slowdown
USD/CHF continues to decline, slipping below 0.8380 amid weaker U.S. inflation data
FUNDAMENTAL OVERVIEW:
The USD/CHF pair extended its decline to around 0.8360 during Friday’s early European session, pressured by softer US producer and consumer inflation data weighing on the US Dollar. Investors now turn their attention to Switzerland’s April Producer and Import Prices report due later in the day.
According to Thursday’s Bureau of Labor Statistics data, the US Producer Price Index (PPI) rose 2.4% year-over-year in April, down from March’s 2.7% and below the expected 2.5%. Earlier this week, the US Consumer Price Index (CPI) increased 2.3% YoY in April, slightly below the 2.4% forecast.
Market sentiment is pricing in about a 75.4% probability of a 25-basis-point rate cut by the Federal Reserve in September, though some analysts suggest the central bank may delay such a move until December.
Fed Chair Jerome Powell stated on Thursday that US central bank officials believe it’s necessary to reassess key aspects of their approach to jobs and inflation, considering recent inflation trends. Meanwhile, Fed Governor Michael Barr noted the economy remains strong with inflation moving closer to the 2% target, but trade policies have introduced uncertainty to the outlook.
This economic uncertainty may weigh on market sentiment, boosting the Swiss Franc’s (CHF) safe-haven appeal and putting pressure on the USD/CHF pair. However, the Swiss National Bank’s (SNB) dovish stance could limit further CHF gains. SNB Chairman Martin Schlegel highlighted the bank’s readiness to cut rates below zero if inflation continues to fall short of its target.
USD/CHF TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/CHF is trading within a up channel.
USD/CHF is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 0.8390
Immediate support level: 0.8320
HOW TO TRADE USD/CHF
After a sharp decline, USD/CHF found support and reversed upward, making higher highs. It recently broke through a key resistance level and is currently pulling back to test that support along with the moving averages. The price is now bouncing off this support zone, and if it holds above this critical level, the pair is likely to continue its upward trend.