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The Global Dollar Sell-off is the Catalyst For the USDCHF Decline

11/14/2022 2:06 PM

Last week, after the publication of US macroeconomic statistics, the USD/CHF pair was rapidly losing value, and the decline may continue with the target at 0.9405.

Thus, the renewed data on US inflation was worse than market expectations: the consumer price index decreased by 0.5% YoY and amounted to 7.7% by 0.3% to 6.3% Core CPI MoM. Experts expected the indicator to weaken due to monetary policy tightening but not so strong, so now they are assessing how the statistics will affect the rhetoric of the US Federal Reserve, predicting a hawkish correction in the issue of tightening monetary stimulus. Statistics from the University of Michigan exerted additional pressure on the dollar: the consumer expectations index for November fell from 56.2 points to 52.7 points, and the consumer sentiment index fell from 59.9 points to 54.7 points.

The strengthening of the Swiss franc was influenced by the speech of the National Bank of Switzerland chairman, Thomas Jordan, who hinted to investors that the regulator would act decisively to combat rising inflation. The agency will likely continue to tighten monetary policy at a meeting on December 15, which will support the national currency.

The long-term trend has changed downwards. The price has broken the key support levels, and the rate's fall has stopped around ​​0.9405. In the coming days, a correctional model may develop with a test of 0.9500 and 0.9650, from where we can consider new short positions with the target at 0.9375.

The medium-term trend is downward, and within its framework, market participants reached the target zone 5 (0.9447–0.9435), in case of breakdown of which the next sell target will be zone 6 (0.9319–0.9306), and the key trend resistance shifts to 0.9540–0.9528, after the achievement of which can be considered short positions with the target at the low of last week around ​​0.9405.

Resistance levels: 0.9500, 0.9650. | Support levels: 0.9375, 0.9205, 0.9155.

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