USD/CHF Forecast: Federal Reserve Expecting to Do More

USD/CHF Forecast: Federal Reserve Expecting to Do More

  • The safe-haven dollar continues to shine amid the global crisis.
  • China’s COVID-19 restrictions might hurt global growth prospects.
  • The Fed is expected to raise rates by another 75 basis points.

Today’s USD/CHF forecast is bullish as the dollar continues to rally. The US dollar went up to a two-decade high against major peers today as investors scrambled for safety and expectations of further aggressive rate hikes by the Federal Reserve grew.

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“Haven demand for USD, coupled with an upside surprise in last Friday’s payrolls release, likely contributed to the latest bout of dollar strength,” said analysts at Maybank.

The safe-haven US dollar is also supported by worries about global growth prospects, with China, in particular, implementing strict zero-COVID policies to contain the new Omicron subvariant.

“We expect COVID restrictions, mainly in the form of rolling mini-lockdowns for the rest of the year, which would be less disruptive to production or supply chains, along with the gradual rollout of more supportive policies,” UBS Global Wealth Management said.

The most significant factor in the dollar’s rise is that investors are worried the Federal Reserve will hike rates more rapidly and further than other central banks. This fear has seen the USD/CHF rally, and this move might continue.

At its July 26-27 meeting, the Federal Reserve is expected to deliver a 75bps rate hike for a second time. Currently, at 1.58%, Fed funds futures are expected to go up to 3.50% in March.

Investors are awaiting the US consumer price data due on Wednesday, with economists polled by Reuters expecting it to come in at an 8.8% annual rate for June.

USD/CHF key events today

Investors do not expect significant news releases that might cause volatility in the pair today.

USD/CHF technical forecast: Resistance at 0.98824

USD/CHF forecast

The 4-hour chart shows a strong bullish trend with the price trading well above the 30-SMA with very small retracements. The RSI is trading in the overbought region, showing bulls were strong enough to push momentum above 70. However, it is also possible that bears will come in to test the waters at this point owing to the overbought conditions.

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The price still has room to push higher to 0.98824, its previous support, where it might experience resistance. A return of bearish momentum might only drop the price to the 30-SMA before the bullish trend continues.

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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.