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  • Another 75bps hike is in the books for the Fed.
  • The Fed is determined to tame inflation despite the consequences.
  • Investors are awaiting the US GDP report.

Today’s USD/CHF outlook is slightly bullish as dollar bulls return after a short breather. According to economists surveyed by Reuters, the Federal Reserve will raise its benchmark interest rate to a much higher peak than anticipated two weeks ago, and the odds are heavily in favor of an even higher terminal rate.

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The Fed raised rates by 75 basis points last week for the third consecutive meeting, and this week it signaled that it expected rates to rise even more to control inflation.

A Reuters survey conducted following the Fed meeting last week found that 59 of 83 economists believed the central bank would raise its fed funds rate by three-quarters of a percentage point for the fourth consecutive meeting in November. This is a 70% chance.

“With inflation, this high, history says you need to get at it sooner and follow through. The real policy mistake is not bringing inflation back down to 2%,” said Michael Gapen, chief U.S. economist at BofA Securities.

“If a near-term recession and a larger increase in the unemployment rate than they are projecting are needed to bring inflation down, that is not a policy error in their mind.”

USD/CHF key events today

Investors will see how the US economy holds up to higher interest rates when the Q2 GDP is released later today. The initial jobless claims will give insight into the US labor market.

USD/CHF technical outlook: Bulls aiming to hit parity

USD/CHF outlook

Looking at the 4-hour chart, we see the price at the 30-SMA and the RSI slightly above 50, showing buyers are returning. Buyers had initially pushed the price to 0.9950, where they experienced resistance and failed to go above. At this point, sellers took over, pushing the price below the 30-SMA.

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However, buyers were waiting to get back to the 0.9750 support level. The move up paused at 0.9850, a key resistance level. The price is also experiencing resistance from the 30-SMA. Buyers will need a lot of momentum to push above this zone. If they do, the price will likely head for parity. However, if they fail, it will retest 0.9750.

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