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  • Fed Chair Jerome Powell has accepted the possibility of a mild US recession.
  • The US PCE Index will show the state of inflation.
  • In the charts, the RSI shows weakness in bearish momentum.

Today’s USD/CHF forecast is bullish as the dollar strengthened after Powell’s hawkish comments yesterday. Powell said the Fed would do everything to get inflation under control despite the high possibility of a mild recession. These comments had investors running toward the safe-haven dollar.

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The US economy contracted slightly in Q1 as the trade deficit data released by the Commerce Department showed a widening to a record high. Today’s PCE data might give investors more insight into what the Fed will do, as it will show if inflation is going down.

“The clock is kind of running on how long we will remain in a low-inflation regime. … The risk is that you start to transition into a higher inflation regime because of the diversity of shocks. Our job is to prevent that from happening, and we will prevent that from happening,” Powell said at a European Central Bank conference.

USD/CHF key events today

The Swiss franc will be at the mercy of the US dollar today as there are significant news releases from the US but none from Switzerland. Investors will be paying attention to US inflation later today when the Core PCE Price Index for May is released. The consensus is at 0.4% from the previous 0.3%.

The initial jobless claim report will measure the number of people who applied for unemployment insurance for the first time in the past week. Investors expect a drop from 229K to 228K.

USD/CHF technical forecast: Bulls targeting 0.9700

USD/CHF forecast

Looking at the 4-hour chart, we see the price pushing higher. It is trading below the 30-SMA, showing bears are ahead. The RSI is trading below the 50 level, also favoring bearish momentum. However, this bearish trend might end soon, as seen in how the RSI shows a bullish divergence. This divergence shows weakness in the bearish momentum.

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The price has found support at 0.95004. The bearish trend might continue if bears can muster the momentum to break below this level. If they fail, we could see the price breaking above the 30-SMA and pushing toward the June 17 resistance at 0.97000.

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