The USDCHF pair declines to 0.9120 due to selling pressure on the US Dollar. The Swiss Franc (CHF) is supported by the cautious market sentiment preceding the publication of Gross Domestic Product (GDP) data from Switzerland and the United States on Thursday.
US PMI Suggests A Hawkish Fed
Controversial indicators such as robust PMI data, recent hawkish remarks from Federal Reserve (Fed) officials, and higher-than-anticipated US inflation figures have fueled speculation that the Fed may postpone interest rate decreases this year. The financial markets currently assign an almost 50% probability, as measured by the CME FedWatch instrument, that the Federal Reserve will maintain current rates in September.
As a result of persistently high inflation in the United States, Fed policymakers have emphasized the importance of maintaining elevated interest rates for an extended period to ensure that inflation continues to trend towards the 2% target. This anticipation may provide the US Dollar with temporary support, potentially bolstering the USDCHF pair.
What To Look At For The US Dollar?
In addition, investors await the publication of the Personal Consumption Expenditures (PCE) index on Friday in the hopes of gaining new information. The headline PCE for the United States is anticipated to increase by 2.7% year-over-year and 0.3% month-over-month in April. The Core PCE, the preferred inflation indicator of the Federal Reserve, is projected to rise by 2.8% year-over-year and 0.3% month-over-month. Inflation data that exceeds expectations could cause the USD to strengthen against the CHF.
What's For The CHF?
On the Swiss side, ongoing geopolitical tensions in the Middle East and cautious market sentiment could bolster safe-haven flows, thereby bolstering the CHF. As reported by Reuters, Gazan authorities disclosed that a fire ignited by an Israeli airstrike in a tent camp in Rafah, resulting in the deaths of 45 individuals. In response, international leaders urged adherence to a World Court mandate to cease Israel's aggression.
In addition, quarterly GDP growth for Switzerland is anticipated to be 0.3% in the first quarter, with annual GDP growth reaching 0.1% in the same period. Positive GDP data may contribute to the CHF's near-term strengthening.
USDCHF Forecast Technical Analysis
In the daily chart of USDCHF, the ongoing buying pressure is valid as the recent price trades higher with a new swing formation.
In the MA wave, the current value of MA from 150 to 250 days, is below the current price with a bullish slope. Moreover, the dynamic 20 day Exponential Moving Average is below the current price, working as an immediate support.
In the near-term price action, a base is found at the 0.9086 level from where a bullish reversal has appeared. In that case, the price has a higher possibility of extending the buying pressure and reaching the 0.9400 psychological line.
On the bearish side, a failure to hold the price above the 0.8998 level could lower the price towards the 0.8800 high volume line.
