USD/CHF Outlook: Bulls Return amid Hawkish Fedspeak

• The dollar rose after the Fed’s James Bullard argued for future rate increases.
• Bullard believes rates need to get to between 5.00% and 5.25%.
• Investors are awaiting Jerome Powell’s speech for more clues on the future of monetary policy.

Today’s USD/CHF outlook is bullish as the dollar extends Monday’s gains. On Monday, the dollar recovered some of its early losses as a hawkish Federal Reserve official argued for future rate increases.

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St. Louis Fed President James Bullard stated that the US central bank needs to raise interest rates quite a bit more and then holds them there throughout next year and into 2024 to get control of inflation and bring it back toward the Fed’s 2% goal. This saw the dollar rise.

Bullard reiterated his belief that for the Fed’s target policy rate to be “sufficiently restrictive” to lower inflation, it must rise to at least a range between 5.00% and 5.25% from the current level of 3.75%-4.00%.

Comments from Fed Chair Jerome Powell on Wednesday will be closely scrutinized for any new indications of additional tightening while important November US jobs figures are due on Friday. Markets expect a 50bps rate hike when the Fed meets on December 13–14.

Earlier Monday, due to worries about China, the dollar had fallen despite gains in the Swiss franc and the Japanese yen, two other safe-haven currencies. Hundreds of protesters and police clashed in Shanghai on Sunday night as resentment for China’s strict COVID policies grew.

USD/CHF key events today

Investors will pay attention to GDP data from Switzerland that will show the economy’s health. There will also be a CB consumer confidence report from the US.

USD/CHF technical outlook: Bulls run into strong resistance at the 0.9501 level

Looking at the 4-hour chart, we see the price trading at the 30-SMA and the RSI slightly below 50, showing bears are slightly stronger. The price is also caught in a larger range with support at 0.9400 and resistance at 0.9600.

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Within this consolidation, bears and bulls are fighting for a breakout either above or below the range area. A break above the resistance would lead to a strong bullish trend, while the opposite is true. Bulls have paused at 0.9501 resistance, and the price is retesting the 30-SMA. If bears take over, the price will attempt a break below 0.9400.

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