USD/CHF Price Forecast: Corrects to near 0.8400
- USD/CHF corrects to near 0.8400 as the US Dollar faces pressure due to slower-than-expected US CPI data for April.
- Market expectations for the Fed to leave interest rates steady in June remained unchanged despite US inflation cooling down.
- The Swiss Franc pair breaks above the 20-day EMA, suggesting a strong uptrend.
The USD/CHF pair retraces to near the round-level support of 0.8400 during North American trading hours on Tuesday. The Swiss Franc pair corrects as the US Dollar faces selling pressure after the release of the United States (US) Consumer Price Index (CPI) data for April, which showed that price pressures rose at a moderate pace.
The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, corrects to near 101.30 from the monthly high around 102.00 posted on Monday.
According to the CPI report, the headline inflation rose at a slower pace of 2.3% year-on-year, compared to the estimates and the prior release of 2.4%. In the same period, the core CPI – which excludes volatile food and energy prices – grew steadily by 2.8%, as expected.
Cooling inflationary pressures have not impacted market expectations for the Federal Reserve’s (Fed) monetary policy outlook. According to the CME FedWatch tool, the probability for the Fed to leave interest rates steady in the current range of 4.25%-4.50% in July remained steady at 61.4%. On Monday, traders pare Fed dovish bets for the July policy meeting after the US and China agreed to lower tariffs by 115% for 90 days.
Meanwhile, the Swiss Franc (CHF) trades higher against its peers, except antipodeans, on Tuesday.
Swiss Franc PRICE Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.48% | -0.40% | -0.37% | 0.16% | -0.90% | -0.95% | -0.39% | |
| EUR | 0.48% | 0.09% | 0.12% | 0.64% | -0.42% | -0.45% | 0.12% | |
| GBP | 0.40% | -0.09% | 0.04% | 0.55% | -0.50% | -0.56% | 0.04% | |
| JPY | 0.37% | -0.12% | -0.04% | 0.54% | -0.53% | -0.60% | 0.03% | |
| CAD | -0.16% | -0.64% | -0.55% | -0.54% | -1.14% | -1.11% | -0.53% | |
| AUD | 0.90% | 0.42% | 0.50% | 0.53% | 1.14% | -0.04% | 0.54% | |
| NZD | 0.95% | 0.45% | 0.56% | 0.60% | 1.11% | 0.04% | 0.58% | |
| CHF | 0.39% | -0.12% | -0.04% | -0.03% | 0.53% | -0.54% | -0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
USD/CHF gauges cushion near the horizontal support plotted from the September 6 low of 0.8375, which used to be a major resistance for the pair. The asset has climbed above the 20-day Exponential Moving Average (EMA), which trades around 0.8326, indicating a strong bullish trend.
The 14-day Relative Strength Index (RSI) jumps to near 60.00. A fresh bullish momentum would come into effect if the RSI breaks above the 60.00 level.
A fresh upside move in the pair towards the April 10 high of 0.8580 and the April 8 high of 0.8611 would appear if it breaks above the psychological level of 0.8500.
On the flip side, a downside move below the May 7 low of 0.8186 would drag the asset towards the April 11 low of 0.8100, followed by the April 21 low of 0.8040.
USD/CHF daily chart
(This story was corrected on May 13 at 14:44 GMT to say, in the second bullet, that market expectations for the Fed to leave interest rates steady in June remained unchanged, not in April.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
