USD/CHF Prediction Amid Swiss Franc’s Accelerated Sell-off

ByDawn Pipkin

May 16, 2022
  • USD/CHF witnesses a massive bullish trend.
  • The pair explores the highest mark since 2019.
  • The SNB and Fed divergence contributed to the performance.

The Swiss franc extended its relentless crash on Monday. Meanwhile, USD/CHF witnessed uptrends over the previous consecutive weeks, trading at its highest value since May 2019. Also, EUR/CHF maintained uptrends over the past three successive weeks.

SNB and Fed Divergence

USD/CHF saw a swift rally as the Swiss National Bank’s divergence with Fed Reserve widened. Fed maintains a hawkish stance as it tries to ease the nation’s escalating inflation. Last week’s data shows the country’s inflation hovered at highs never seen for nearly 40 years. The core CPI, at 6%, also exhibits such conditions.

Nevertheless, data from the past month shows the labor market on lucrative performance. It saw an increase of 400K jobs (April only), whereas the unemployment rate plummeted to 3.5%.

Last week’s meeting saw Fed officials revealing more interest rate hikes by the bank in the upcoming months. Market players expect the bank to increase the rates by 0.50% next month before shifting to 0.25% increases.

On the other side, the Swiss National Bank signaled to keep its interest rates unaltered. Moreover, the nation’s inflation appeared better than in most countries. Fitch data shows the Consumer Price Index jumped to 2.5%. That came as gas and oil noted price increases. Moreover, Fitch expects inflation to drop to 1.7% by 2022 end.

USD/CHF Forecast

According to the 24-hour chart, the USD/CHF maintained a massive bullish bias over the past couple of months. The pair moved briefly above the 1.00 parity. The upside moves extended after prices moved beyond the crucial resistance near 0.9460, the highest mark on 16 March.

The pair climbed beyond all moving averages as the Stochastic Oscillator moved into the overbought region. Also, the price surged beyond the Parabolic SAR’s dots. Thus, the pair might keel surging as market players target the critical resistance at 1.0200. However, a decline beneath the 0.9900 support will cancel the bullish narrative.

What are your thoughts about the extended sell-off in the Swiss franc? You can utilize the comment area below to share your thoughts.

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