USD/CHF Price Analysis: Fed’s Pause Weighing on US Dollar

USD/CHF Price Analysis: Fed’s Pause Weighing on US Dollar

  • Investors hope the Fed will loosen its policy as the US economy deteriorates.
  • Business activity fell in the US for a fourth consecutive month.
  • Economists expect Fed hikes to drop to 50bps in December.

Today’s USD/CHF price analysis is bearish. The safe-haven US dollar weakened versus the Swiss franc on Tuesday in response to indications that the Federal Reserve’s rate hikes are already slowing down the largest economy in the world.

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The S&P flash PMI data showed US business activity down for a fourth consecutive month in October. According to economists surveyed by Reuters, rate rises will decrease to 50 basis points in December, reflecting bets in the money markets.

Given that it takes several months for any rate change to take effect, Fed officials have started to consider when they should limit the pace of rate hikes. The Fed will probably provide more information at its November 1-2 meeting. Officials are weighing what some view as rising dangers to economic growth against a lack of discernible progress in bringing down inflation from its pandemic-related increase.

The Fed is beginning to feel pressure to take a break even as markets predict another sizable increase at the final policy meeting of the year in December. The process of raising interest rates is still ongoing. Still, officials believe they are getting close to the point where they can scale back future rises and possibly come to a complete halt as the economy adjusts.

USD/CHF key events today

Investors expect the US Conference Board’s (CB) Consumer Confidence report. It gauges how confident consumers are about the state of the economy. Its ability to forecast consumer spending, which significantly impacts total economic activity, makes it a leading economic indicator.

USD/CHF technical price analysis: Bulls gear up for another attempt after the false-breakout

USD/CHF price analysis

Looking at the 4-hour chart, we see the price trading slightly above the 30-SMA and the RSI above 50, favoring bullish momentum. The price has been consolidating with support at 0.9925 and resistance at 1.0065. Bulls attempted to break above resistance. However, the price was rejected above 1.0065 and pulled back sharply into the range area.

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Bears then pushed the price below the 30-SMA but could not sustain the move lower. If bulls close above the SMA, they will be looking to retest and possibly break above the 1.0065 range resistance.

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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.