- USDCHF is hurtling towards an uptrend support line from four months ago around 0.9680.
- A softer US inflation report weakened the dollar as investors expected the Federal Reserve to raise rates less aggressively.
- Fed officials commented that projections for September interest rate hikes should be higher.
The USDCHF fell below the 50 and 100 day EMAs following the release of a lower-than-expected US inflation report, sparking a risk-on financial markets as speculators valued a less aggressive stance from the Federal Reserve. At the time of writing, USDCHF is trading at 0.9676, below its opening price.
Inflation in the US declines, with headline inflation below 8%.
The US Consumer Price Index for October rose 7.7% year-on-year, below estimates of around 7.9. Meanwhile, excluding volatile items like Food and Energy, the so-called Core CPI rose 6.3% YoY, below the 6.5% expected. Once the data was released, the Dollar Index, which tracks the value of the dollar against six pairs, plunged and, at the time of writing, extends its losses to 2% at 108,222.
At the same time, last week’s initial jobless claims rose more than estimated, portraying the effects of the Federal Reserve’s monetary policy on the labor market.
Following the release, USDCHF dipped towards a four-month uptrend support trend line, drawn from the August 2022 lows passing around the 0.9670-80 zone. The dollar’s weakness was due to Fed officials signaling that the pace of interest rate hikes would slow at a certain point, so October’s numbers are opening the door for its first rate hike. 50 basis points at the December meeting.
Meanwhile, CME’s FedWatchTool showed that money market futures have priced in a 50 basis point rate hike by the Federal Reserve as the odds are 80%, whereas a day ago, the chances were 50%.
On the other hand. Fed officials cruising the news said that while the October inflation report was positive, the FOMC has to do everything it can to tackle inflation, according to Dallas Fed President Logan. Meanwhile, the Cleveland Fed’s Daly and Philadelphia’s Harker said current federal funds rates (FFRs) are in restrictive territory, though Daly said rates should be higher than September forecasts. .
USDCHF Key Technical Levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
