- Fed officials are maintaining their hawkish stance.
- Markets are expecting Powell to also be hawkish at Jackson Hole.
- The US economy is showing some weakness based on recent economic data.
Today’s USD/CHF price analysis is slightly bearish as the dollar falls on soft economic data. The US dollar is trading barely below milestone highs against most major currencies.
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Neel Kashkari, president of the Minneapolis Fed, was the most recent official to underline the Fed’s priority of keeping inflation under control above all else on Tuesday night. Traders anticipate similar remarks from Fed Chair Jerome Powell when he talks on Friday from Wyoming.
“It might be more sensible for (Powell) to just come in with a flat, ‘Right at the moment, all we care about is getting inflation down,” ING economist Rob Carnell said.
According to traders increasing their forecasts, the Fed Funds Rate is expected to reach 3.7% sometime in the middle of 2023.
However, short-dated Treasury rates have remained steady recently after rising throughout August due to a string of softer U.S. economic reports.
Tuesday’s U.S. services and manufacturing surveys were disappointing, and new home sales in July reached a 6-year low. This news saw USD/CHF retracing the recent bull rally.
The negative comparative outlook in other regions of the world has helped the U.S. dollar, which has garnered support from increasing interest rate expectations. In less than two months, benchmark gas prices in Europe have tripled, and an energy supply crisis from Russia this winter is looming.
USD/CHF key events today
USD/CHF investors will pay attention to news releases from the United States as there won’t be any significant releases from Switzerland. July core durable goods are expected to drop while pending home sales are expected to rise.
USD/CHF technical price analysis: Bearish momentum has come in at 0.96932
Looking at the 4-hour chart, we see a strong bearish move from the 0.96932 resistance level. This move is a sign that the current bullish trend might end. However, to confirm a trend reversal, the price needs to break below the 30-SMA a start making lower lows and lower highs.
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Currently, the price has paused at 0.96255, a support level. This level might not hold for long, and the price will probably break below and retest the next support level at 0.95421.
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Saqib Iqbal
