USD/CHF. Analysis and Forecast

[Ben Graham]

The USD/CHF pair remains within its previous range on Wednesday. The U.S. dollar is receiving moderate support following inflation data published by the Bureau of Labor Statistics, which generally met market expectations. In December, the year-on-year Consumer Price Index rose by 2.7%, matching both the previous reading and the consensus forecast. Core inflation, which excludes the volatile food and energy components, came in at 2.6% year on year, slightly below expectations for an increase to 2.7%. On a month-on-month basis, headline CPI increased by 0.3%, while core CPI rose by 0.2%.

These data reinforce the view that the Federal Reserve will keep interest rates unchanged at its upcoming January meeting. The market continues to indicate that a first rate cut before mid-year is unlikely. This provides fundamental support for the U.S. dollar against the Swiss franc.

At the same time, political instability in the United States and ongoing geopolitical tensions in the Middle East continue to fuel demand for safe-haven currencies, including the Swiss franc.

Concerns about the independence of the Federal Reserve, combined with risks in the Middle East, are limiting the upward potential of the USD/CHF pair despite the recent resilience of the U.S. currency. Investors continue to balance the appeal of dollar yields against the need for defensive assets.

From a technical perspective, oscillators on the daily chart have not yet moved into negative territory, suggesting that bulls are still resisting bears. The pair's key support is at 0.7985 near the 100-day SMA. If prices fail to hold above this level, bulls will begin to lose control. Resistance is seen at 0.8030, above which the pair would face the 200-day SMA.

The table below shows the percentage change dynamics of the U.S. dollar against major currencies at present. The strongest gain of the U.S. dollar is observed against the Australian dollar.

The material has been provided by InstaForex Company - www.instaforex.com