USD/CHF. Analysis and Forecast

[Ben Graham]

Today marks the fifth straight day of positive sentiment for the USD/CHF pair. At the moment, spot prices are fluctuating just below the 0.8060 level. The U.S. Dollar Index (DXY), which reflects the dollar's value against a basket of major currencies, has reached its highest level since late May amid less "dovish" expectations from the Federal Reserve. Following Wednesday's release of the minutes from the October FOMC meeting, it became clear that due to disagreements within the Federal Open Market Committee, the likelihood of another interest rate cut in December has decreased. This development helps ease fears of a prolonged economic downturn caused by U.S. government constraints and strengthens the dollar's position, reinforcing the positive momentum of USD/CHF.

Meanwhile, despite the recent weak Q3 data indicating a contraction in Switzerland's export-oriented economy, the market barely reacted to the recent trade agreement between the U.S. and Switzerland.

Additionally, global trade risks are putting pressure on the Swiss franc, traditionally viewed as a safe-haven currency, which in turn supports the growth of USD/CHF. However, expectations that the Swiss National Bank will keep rates at zero in December—amid new inflation growth forecasts—are limiting further losses of the franc.

On top of this, the fundamental backdrop continues to support the upward trend in USD/CHF.

From a technical standpoint, yesterday's breakout above the 100-day Simple Moving Average (SMA) confirms the likelihood of further upside for the pair. It is also worth noting that daily-chart oscillators remain positive, and prices are holding near the highs of yesterday's impulse without showing signs of a deep pullback, which also confirms the bullish sentiment of the pair.

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