USD/CHF Forecast: US Dollar Giving Up Gains on a Lesser Rate Hike

USD/CHF Forecast: US Dollar Giving Up Gains on a Lesser Rate Hike

  • Dollar weakness is supporting the Swiss franc causing the pair to collapse.
  • The possibility of a surprise ECB rate hike further weakens the dollar.
  • The price is in a steep collapse on the charts.

Today’s USD/CHF forecast is bearish as the US dollar edged lower, nearing a one-week low as investors eased expectations of a percentage point hike from the Federal Reserve this month.

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The Swiss franc is at the mercy of the dollar as there haven’t been any economic releases or political developments in Switzerland. Therefore, weakness in the dollar supports the franc, pushing USD/CHF lower.

The dollar index, which measures the US dollar against six major peers, was down 0.3% at 107.100, well back from the high of 109.29 in the past week, which last reached September 2002.

Expectation easing continues to push the dollar lower, strengthening the Swiss franc.

“We doubt that between now and the July 27 FOMC meeting, markets will seriously reconsider a 100bp increase; first, because the Committee has entered its blackout period, there are no speakers until next week. Second, because the US data flow is set to be mostly second-tier this week,” said analysts at ING in a note.

The pair might also be experiencing volatility brought on by increased bets on a surprise rate hike from the ECB, which would see the dollar fall further.

USD/CHF key events today

USD/CHF investors will receive economic releases from the US and none from Switzerland. The United States will release the building permits report showing the change in the number of new government-issued permits, which will show the current state of demand in the housing market.

USD/CHF technical forecast: Lower low confirms the bearish trend

USD/CHF forecast

Looking at the 4-hour chart, we see the price in an impulsive move down after retesting 0.97836. The price is trading well below the 30-SMA, and the RSI is heading for the oversold region, supporting bearish momentum.

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The price started a new bearish trend confirmed when it broke below and retested the 30-SMA before making a lower low. After such a strong move, it might find support at 0.96795, which acted as support on July 7. Bulls might come back into the oversold region, but the downtrend will continue if the price stays below the 30-SMA.

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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.