FX.co ★ USD/CHF

The USD/CHF currency pair experienced a surge during the early European trading session on Friday, reaching a high of 0.8980. This upward movement was primarily driven by a combination of strong US economic data and a more hawkish-than-expected stance from the US Federal Reserve (Fed). The US economy continues to demonstrate resilience, with recent data points reinforcing this trend. The Bureau of Economic Analysis' third estimate revealed a robust 3.1% GDP growth in the third quarter, surpassing initial expectations. Additionally, while initial jobless claims increased slightly to 230,000, they remained at historically low levels, indicating a strong labor market. The Fed, while implementing a 25-basis point interest rate cut as widely anticipated, signaled a less dovish path for monetary policy going forward. The "dot plot," which reflects individual policymakers' interest rate projections, now points to a potential 50-basis point cut in 2025, a more restrictive stance compared to the full percentage point cut previously expected. The Summary of Economic Projections (SEP) further emphasized this shift, indicating that the Fed plans to reduce interest rates by a total of only a quarter of a percentage point next year, down from the previously projected four cuts. The SNB's recent decision to cut its key interest rate by 50 basis points last week was expected to reinforce market expectations for lower interest rates. However, the recent upward movement in the USD/CHF pair suggests that the impact of this rate cut may be limited.

From a technical perspective, while the USD/CHF pair has witnessed a recent surge, some indicators suggest potential for a near-term correction. The Moving Average Convergence Divergence (MACD) continues to display positive momentum, indicating a bullish trend. However, the Relative Strength Index (RSI) remains near the 50 neutral level, suggesting that the recent upward movement may be losing steam. The release of the US Personal Consumption Expenditures (PCE) price index later on Friday will be closely watched by market participants. This key inflation indicator will provide further insights into the strength of the US economy and could potentially impact the direction of the USD/CHF pair. Overall, the USD/CHF pair is currently experiencing a period of heightened volatility, driven by a confluence of factors, including strong US economic data, the Fed's evolving monetary policy stance, and the SNB's recent interest rate cut. Traders should closely monitor these developments and adjust their positions accordingly.