- USD/CHF attracts some buying on Thursday, breaking a two-day losing streak to hit multi-month lows.
- An aggressive assessment of the Fed’s decision reignites demand for dollars and extends support for the pair.
- The CHF weakens after the SNB announces a 50 basis point rate hike and continues to support the pair’s bullish move.
On Thursday, the USD/CHF pair made a nice intraday rally from the 0.9220 zone and snapped a two-day losing streak to the eight-month low hit the day before. Intraday buying picked up after the Swiss National Bank (SNB) announced its policy decision and pushed prices to a two-day high of 0.9301 early in the European session.
The SNB, as widely expected, raised interest rates by 50 basis points at the end of its December policy meeting to 1%. This is the third consecutive rate hike in as many meetings, bringing the total rate hike to 175 basis points in 2022. The Swiss franc, however, weakened a bit as the central bank reiterated that it will remain active in the foreign exchange markets when necessary. This, coupled with a modest rebound in the US dollar, acts as a tailwind for the USD/CHF pair.
A hawkish assessment of the Federal Reserve’s decision on Wednesday is seen as a key factor lending some support to the dollar. It is worth mentioning that the US central bank said on Wednesday that it will continue raising rates. In addition, policymakers expect the terminal rate to rise to 5.1%, implying a further 75 basis point increase in borrowing costs by the end of 2023. That said, low Treasury yields The US could stop dollar bulls from making aggressive bets. Apart from this, the risk aversion momentum could support the CHF and keep any significant appreciation move for the USD/CHF pair at bay.
Investors are now focused on the US economic calendar, which includes retail sales, the Philadelphia Fed manufacturing index, weekly initial jobless claims data and industrial production data. These data, along with US bond yields, will boost demand for the dollar. On the other hand, risk sentiment in the broader market will be key to taking advantage of short-term opportunities around the USD/CHF pair…
USD/CHF Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
