- Investors are sitting on their hands as they wait for Powell’s testimony.
- Economists believe a 75bps hike by the Fed in the July meeting is possible.
- Price is experiencing resistance from the 0.9700 level.
The USD/CHF price is caught in a sideways move this morning as investors await Fed Chair Jerome Powell’s testimony which could inform on the future of monetary policy. Investors will especially wait to hear if a 75bps rate hike is in the cards for the July meeting.
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Global growth prospects still weigh on US markets, pushing the safe-haven dollar higher. Hawkish statements from Powell could cause more anxiety in the markets and a rally in the dollar. This rally could also mean higher prices for USD/CHF.
Economists polled by Reuters believe the Federal Reserve will deliver another 75bps interest rate hike in July, followed by a 50-bps rise in September, and won’t scale back to 25bps moves until November at the earliest.
Wednesday’s poll results released by Reuters show a lot of momentum behind the Fed doing more despite recession concerns.
USD/CHF key events today
Later today, Swiss National Bank chairman Thomas Jordan is expected to speak. His speeches are known to cause short-term trends as he gives clues on the future of interest rates. He significantly influences the value of the Swiss franc because he is the acting head of the SNB Governing Board, the interest rate setter.
Investors will also pay keen attention to the Federal Reserve Chair, Jerome Powell, who will testify later in the day. The testimony will be before the Joint Economic Committee, where he will give an economic outlook and explain recent policy actions. The testimony is known to cause some volatility in the market.
USD/CHF price technical analysis: Consolidating below 0.9700
Looking at the 4-hour chart, we see the price consolidating below 0.9700. The price is trading below the 30-SMA showing the trend is bearish. At this point, the price could either break above the 30-SMA or push lower to 0.9550. RSI, which is trading below the 50 levels, favors bearish momentum.
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The bias will only change when we see RSI pushing above 50 and the price breaking above the SMA. If this happens, then in time, we could see the price retest the 1.0000 level.
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Saqib Iqbal
