USD/CHF treads water as markets eye the Fed and the SNB
18.09.2023, 20:24

USD/CHF treads water as markets eye the Fed and the SNB

  • USD/CHF trades at 0.8977, a marginal gain of 0.01%, as investors await the Federal Reserve’s policy decision and updated economic projections.
  • Market odds for a November rate hike by the Fed dip below 30%, potentially setting the stage for USD weakness.
  • Swiss National Bank expected to hike rates by 25 basis points to 2%.

The US Dollar (USD) posts minuscule gains against the Swiss Franc (CHF), ahead of monetary policy decisions by the US Federal Reserve (Fed) and the Swiss National Bank (SNB). At the time of writing, the USD/CHF is trading at 0.8977, gaining 0.01% after hitting a daily low of 0.8949.

US Dollar and Swiss Franc locked in a tight range ahead of pivotal monetary policy updates from the Federal Reserve and Swiss National Bank

Market sentiment improved, as shown by Wall Street’s finishing with solid gains as investors await the Federal Reserve to keep rates unchanged at Wednesday’s meeting. The Fed Chair Powell and Co will also update its Summary of Economic Projections (SEP), which drafts the US central bank economic outlook for the remainder of 2023 and subsequent years.

The outcome of the US central bank is crucial, as investors expect no further hikes, as odds for the November meeting dropped below 30%, as outlined by the CME FedWatch Tool. That could pave the way for US Dollar weakness, hence a headwind for the USD/CHF pair.

On the other hand, the Swiss National Bank (SNB) would likely hike rates by 25 bps, towards 2%, seen as investors as peak rates, according to money market futures. Although the latest inflation report in Switzerland witnessed a 1.6% YoY uptick, it remains below the central bank’s 2% target. Nevertheless, the SNB would likely maintain its restrictive stance to stabilize prices.

USD/CHF Price Analysis: Technical outlook

From a technical standpoint, the major is set to extend its rally, reaching a new multi-month high of around 0.8982. Buyers are still eyeing the 0.9000 figure, followed by the 200-day Moving Average (DMA) at 0.9038. On the flip side, if USD/CHF breaks below 0.8949, that could open the door to test 0.8900.

 

 

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