USDCHF falls back towards 0.9400 after hawkish statements by Jordanian SNB

• Federal Reserve members insisted on the need to prolong rate hikes, albeit at a slower pace, which strengthened the dollar.
• The Swiss franc continues to strengthen against the US dollar.
• Based on the data, SNB Governor Thomas J. Jordan said they could raise rates in December.
• USDCHF Price Analysis: Will continue to weaken once above 0.9370.

The USDCHF extends some of last week’s losses, courtesy of official comments from the Federal Reserve, which spurred risk aversion in financial markets. Therefore, global stocks fell, while the safe-haven status of the dollar increased. At the time of writing, the USDCHF is trading at 0.9410, posting a decent loss of 0.18%.

Vice President Brainard sees it appropriate to slow down the pace of rate hikes

US stocks fell after statements by two members of the Federal Reserve (Fed) board. Over the weekend, Christopher Waller asserted that the Fed “still has a ways to go” when it comes to tightening monetary conditions. He added that the Central Bank is not close to taking a break and that could moderate the size of interest rate hikes to 50 basis points at its December meeting or the nextreiterating that the US central bank is nowhere near a pause.

Lael Brainard, Fed vice chair, commented that it is wise to slow the pace of rate hikes, though stressing that “we (the Fed) have additional work to do,” adding that it will take some time for cumulative tightening to “flow” into the economy. She said the October CPI print could suggest that the Fed’s favorite indicator of inflation, core PCE, “may also be showing a bit of a drawdown.”

As for the Swiss franc, the Chairman of the Governing Board of the Swiss National Bank (SNB), Thomas J. Jordan, crossed the wires. He said Swiss growth is expected to be weaker in 2023 than in the current year, adding that unemployment will not prevent further rate hikes. Jordan said inflation has widened and he sees a “high probability” the SNB will have to tighten conditions. Regarding the December meeting, he said that the Central Bank could raise rates, but it would depend on the data.

Therefore, the USDCHF is expected to be supported by economic data from the US and Switzerland along with monetary policy. However, speculation about a Fed pivot would keep the dollar on the back foot, boosting prospects for a stronger Swiss franc. Therefore, the USDCHF could test the August monthly lows around 0.9370 before extending its decline to a year low of 0.9091.

USDCHF Price Analysis: Technical Perspective

From a technical point of view, the USDCHF freefall is likely to continue after dipping below the 200 day EMA at 0.9617. Also, once USDCHF falls below the Aug 11 daily low at 0.9379, that could open the door to testing the yoy low at 0.9091. It should be noted that the Relative Strength Index (RSI) is oversold, but due to the strength of the downtrend, it could fall towards 20, pointed out by “some” analysts as the most extreme oversold condition.

Therefore, key USDCHF support levels lie at 0.9400, followed by the Aug 11 low at 0.9379. A break below will expose the April 12 low at 0.9286, before the February 21 daily low at 0.9150.