USDCHF testing long-term highs at 1.0145 buoyed by Fed tightening expectations
03.11.2022, 16:14

USDCHF testing long-term highs at 1.0145 buoyed by Fed tightening expectations

  • The dollar finds support at 1.0090 and approaches the 1.0145 high again.
  • Renewed hopes of aggressive Fed tightening have boosted the US dollar.
  • US services sector's activity data weighed on the USD earlier today.

The US dollar failed earlier today on its first attempt to breach multi-year highs at 1.0145 although the bearish reaction has been contained at 1.0090, with the pair returning above 1.0100 shortly afterward.

The Federal Reserve has given a fresh boost to the dollar

On Wednesday, the US Federal Reserve raised interest rates by 75 basis points, as expected, and reaffirmed their decision to keep tightening monetary policy until consumer inflation returns to the 2% target.

Fed President, Jerome Powell struck a hawkish tone on the press release and suggested that rates might peak at higher levels than markets had expected. These comments have dampened hopes of a slower hike in December sending the US dollar higher across the board.

On the macroeconomic front, US data have not been dollar-supportive on Thursday. The US ISM Services PMI expanded at a slower rate than expected in October, 54.4 against the consensus 55.5, which has triggered a moderate pullback on the USD.

In Switzerland, October’s Consumer Price Index has shown a sharper-than-expected deceleration. Yearly inflation slowed down to 3% from 3.3% in the previous month, against the 3.2% forecasted by the market. These figures have failed to offer any support to a vulnerable Swiss franc.

Technical levels to watch

 

 

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