USD/CHF Forecast: Bears Dominating, All Eyes on the FOMC

USD/CHF Forecast: Bears Dominating, All Eyes on the FOMC

  • Investors are awaiting the FOMC meeting.
  • Economic growth concerns are plaguing investors.
  • US consumer confidence dropped significantly.

Today’s USD/CHF forecast is bearish as the focus shifts to how deeply indicators of an economic slowdown have resonated with the Federal Reserve’s officials as they prepare to hike rates by 75bps.

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The predicted rise in the federal funds rate, the Fed’s main instrument for attempting to pull inflation down from a four-decade high, will bring the US central bank to a kind of turning point as it approaches a level of about 2.4 percent that is thought to no longer stimulate economic growth.

Even before this week’s two-day policy meeting, investors believed the inflation problem was so serious that there was a one-in-four chance the Fed would shock the markets by raising its benchmark overnight interest rate by a larger percentage point, similar to the hikes used by then-Fed Chair Paul Volcker in the early 1980s.

The question now is whether the Fed is at risk of going overboard as the effects of its actions on the economy become more obvious.

When Walmart, whose vast footprint offers a broad view of consumer behavior, cut its profit outlook and claimed that inflation had forced consumers to spend their money on food and fuel instead of higher-margin discretionary items like electronics and apparel, it stoked fears of a stalling economy late on Monday. In response to inflation and as a precaution against a potential global recession. To make matters worse, consumer confidence in the US dropped significantly from 98.4 to 95.7.

USD/CHF key events today

AUD/USD Investors will be watching the FOMC meeting in anticipation of the Fed’s anticipated 75 basis point rate hike. There will also be a pending home sales report expected to drop from 0.7% to -1.5%. Finally, core durable goods orders in the US are also expected to drop from 0.7% to 0.2%.

USD/CHF technical forecast: 0.9600 support level in spotlight

USD/CHF forecast

The 4-hour chart shows the price trading below the 30-SMA and the RSI below 50, favoring bearish momentum. This move might pause at 0.96000, a key support level, before bouncing off or breaking below.

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A break below the level is highly likely and would push the price to retest the next support level at 0.95023.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.