USD/CHF Forecast: Fed to Continue Hawkishness Amid Rising Inflation

USD/CHF Forecast: Fed to Continue Hawkishness Amid Rising Inflation

  • Jerome Powell stated that it would be premature to discuss pausing amid high inflation.
  • The Fed raised interest rates by 75bps for the fourth consecutive time.
  • According to Powell, the Fed’s funds rate might end up higher than anticipated.

Today’s USD/CHF forecast is bullish. The dollar gained momentum on Wednesday after Federal Reserve Chair Jerome Powell stated that there is “no sense that inflation is coming down,” making it premature to discuss pausing interest rate increases to combat growing consumer prices.

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Following a two-day meeting of policymakers, the Fed increased its benchmark lending rate by 75 basis points for the fourth consecutive time, as markets had anticipated. Markets originally saw the Fed’s statement following the meeting as dovish and suggesting that future rate rises to control rising inflation might be made in more gradual steps.

Powell did, however, make plain that a misstep in not tightening monetary policy enough would risk dealing with persistent inflation.

According to Powell, the Fed’s next meeting in December could see a shift in the pace at which rates are raised. He did, however, issue a warning that there is still a great deal of uncertainty on how high rates should go and that they might end up being higher than initially anticipated by policymakers.

The Fed’s next meeting will take place on December 13–14. The futures markets are split on how much the Fed will raise rates. According to the FedWatch tool, there is a 56.8% chance of a 50 basis point rise and a 43.2% possibility of a 75 bps increase.

USD/CHF key events today

Investors will pay attention to the initial jobless claims, and ISM non-manufacturing PMI reports from the United States.

USD/CHF technical forecast: Bulls poised to hit 1.0100 after breaking above parity

USD/CHF forecast

Looking at the 4-hour chart, we see the price trading well above 30-SMA and the RSI above 50. Bulls are in control and are respecting the 30-SMA as support. The price has been trading within a range with support at 0.9925 and resistance at 1.0002.

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Bulls have finally broken out of this consolidation with a strong candle, and the price is currently retesting the recently broken resistance. If the resistance holds strong, bulls will be looking to retest 1.0100. However, if it fails, the price will likely resume trading within the range.

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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.