- USD/CHF catches aggressive bets and jumps to a two-week high following the SNB policy decision.
- A 75 bps hike was already priced in and weighed on the CHF in the absence of any hawkish surprise.
- Bets for more aggressive Fed rate hikes continue to lift the USD and remain supportive of the move.
The USD/CHF pair spikes to a two-week high after the Swiss National Bank (SNB) announced its monetary policy decision. The pair breaks above the 100-day SMA barrier during the early European session and is currently trading around the 0.9800 region.
As was widely expected, the SNB hiked its benchmark sight deposit interest rate by 75 bps to 0.50% from -0.25% previous. This comes on the back of a surprise 50 bps increase in the June meeting, which was the first hike since September 2007. The Swiss franc, however, weakens across the board in the absence of a hawkish surprise. Apart from this, relentless US dollar buying provides a strong lift to the USD/CHF pair.
In fact, the USD Index, which measures the greenback's performance against a basket of currencies, rose to a fresh 20-year peak amid a more hawkish stance adopted by the Federal Reserve. It is worth noting that the Fed raised interest rates by another 75 bps on Wednesday and signalled more aggressive rate increases at its upcoming meetings. Apart from this, technical buying above the 100 DMA barrier remains supportive of the move.
The pair will soon reach resistance in the 0.9830s from a trendline drawn connecting the June and September 2022 highs which is also the upper boundary of a falling channel the pair has been oscillating in for most of the year. A clear break above the channel line and daily open or close above would be required to provide confirmation of a breakout and fresh impetus to the uptrend. Such a move, however, would then probably lead to an extension higher to a target, first at parity, and then 1.0080, which is the 61.8% Fibonacci extension of the move inside the channel prior to the breakout – the usual method used by analysts for forecasting such extensions.
Investors now look forward to the post-meeting press conference, where comments by Thomas Jordan, Chairman of the Governing Board of the SNB, should provide a fresh impetus to the USD/CHF pair. Later during the early North American session, traders will take cues from the release of the US Weekly Initial Jobless Claims data.
Technical levels to watch
|Today last price||0.9623|
|Today Daily Change||-0.0041|
|Today Daily Change %||-0.42|
|Today daily open||0.9664|
|Previous Daily High||0.97|
|Previous Daily Low||0.962|
|Previous Weekly High||0.9661|
|Previous Weekly Low||0.948|
|Previous Monthly High||0.9808|
|Previous Monthly Low||0.9371|
|Daily Fibonacci 38.2%||0.967|
|Daily Fibonacci 61.8%||0.9651|
|Daily Pivot Point S1||0.9623|
|Daily Pivot Point S2||0.9582|
|Daily Pivot Point S3||0.9543|
|Daily Pivot Point R1||0.9703|
|Daily Pivot Point R2||0.9741|
|Daily Pivot Point R3||0.9783|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD retreats to 1.0750, looks to post small weekly gains
EUR/USD lost its traction and declined to the 1.0750 area in the American session on Friday. In the absence of high-tier data releases, week-end flows seem to be impacting the pair's action heading into the weekend.
GBP/USD holds above 1.2550 ahead of the weekend
GBP/USD keeps its footing on Friday and trades modestly higher on the day above 1.2550 following Thursday's rally. Ahead of next week's all-important US inflation data and Fed policy announcements, modest US Dollar weakness allows the pair to stay in positive territory.
Gold struggles to find direction, holds steady near $1,960
Gold price struggles to make a decisive move in either direction on Friday in the absence of high-impact data releases. The benchmark 10-year US Treasury bond yield stays relatively calm above 3.7% following Thursday's slide, limiting XAU/USD's action.
Weekly Roundup: Binance US halts fiat services, Coinbase does business as usual, XRP hits key milestone
The US financial regulator, the Securities and Exchange Commission’s (SEC) clampdown on exchange negatively influenced the crypto market and assets throughout the week. The lawsuits against Binance and Coinbase resulted in several challenges for the platforms’ users.
The Week Ahead - FOMC, ECB and Bank of Japan, US CPI, China retail sales and Tesco results
A busy week is ahead, including meetings from the Federal Reserve, the European Central Bank, and the Bank of Japan. Data to be released includes US CPI and China retail sales. Tesco will also release results.