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Awaiting the Swiss National Bank's Interest Rate Decision

12/14/2022 2:29 PM

At the moment, the USD/CHF pair is developing a "bearish" momentum, trading around the 0.9293 mark. Yesterday, updated data on inflation in the USA were published, which turned out to be worse than the preliminary estimates of analysts, which led to a decline in the dollar against all currencies.

Thus, the consumer price index in annual terms by the end of November slowed from 7.7% to 7.1%, which was lower than analysts' expectations of a decrease to 7.3%, and in monthly terms, the indicator added 0.1% after an increase of 0.4% in October, while the base value year-on-year dropped from 6.3% to 6.0%, also being better than the 6.1% estimated by experts. Against the background of declining inflation, the question arises about the need for further tightening of the US monetary policy, and the US regulator during the last meeting this year is likely to raise the interest rate by the previously planned 50.0 basis points, but the further rate of adjustment of the value may decrease.

Also tomorrow at 10:30 (GMT+2), the Swiss National Bank is expected to decide on the interest rate, which can be increased by 50.0 basis points to 1.00%. If the forecast comes true, the Swiss franc may strengthen strongly against the USD.

At the moment, the quotes of the USD/CHF pair have broken down the support level of 0.9375 and dropped to the level of 0.9235. The long-term trend in the instrument remains downward, so the decline is likely to continue with a target at 0.9205. The nearest resistance level is around 0.9400, if the price corrects to this area, it is worth considering new short positions of the trading instrument.

Within the mid-term downtrend, the pair successfully reached the target zone of 0.9260-0.9229. At the moment, there may be a consolidation of large sell positions, after which a correction is likely to develop with a target at the key resistance of the trend 0.9581–0.9548. If, as part of the correction, the price reaches this resistance, then it will be possible to consider new sales of the instrument with a target at the current week's minimum of 0.9230.

Resistance levels: 0.9400, 0.9550, 0.9600. | Support levels: 0.9205, 0.9155, 0.9089.

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