USD/CHF Price Analysis: Surging amid 73% Chance of 75bps Hike

• Powell promised pain as the Fed continues its fight against inflation.
• There is a 73% chance of a 75bps Fed rate hike in September.
• The US dollar hit a new two-decade high at 109.450.

Today’s USD/CHF price analysis is bullish as markets expect a 75bps rate hike from the Federal Reserve in September. Hopes that the central bank will once again come to the aid of the markets were dashed by Federal Reserve Chair Jerome Powell’s threat of inflation-controlling policy “pain.”

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Isabel Schnabel, a board member of the European Central Bank, delivered a tough love message over the weekend, cautioning that central banks must now take decisive action to battle inflation, even if doing so sends their economy into recession.

“The main takeaway is taming inflation as job number one for the Fed, and the Funds Rate needs to get to a restrictive level of 3.5-4.0%,” said Jason England, global bonds portfolio manager at Janus Henderson Investors.

With rates expected to peak at between 3.75% and 4.0% and stay there for longer, futures are currently pricing in a roughly 73% chance that the Fed will raise rates by 75 basis points in September.

What the August payroll data will reveal this Friday might have a significant impact. Following July’s record-breaking surge of 528,000, analysts anticipate a mild increase of 285,000.

As markets priced in a potential economic slump, the aggressive central bank chorus increased short-term yields internationally while further inverting the Treasury curve.

All of these factors helped the safe-haven dollar, which soared to a new two-decade high of 109.450 against a basket of major currencies, surpassing the previous peak in July.

USD/CHF key events today

There won’t be any significant news releases from the US or Switzerland today, so the pair will likely extend Friday’s gains.

USD/CHF technical price analysis: Bulls to close above 0.96932 for further upside

Looking at the 4-hour chart, we see the price in a solid bullish trend as it is trading well above the 30-SMA. The RSI, which trades above 50, also favors bullish momentum.

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Bulls are currently attempting a break above a critical resistance level at 0.96932. The price will increase if the current candle can close above this level. However, if it does not, we might see the price retesting the 30-SMA.

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