USD/CHF forecast ahead of the SNB interest rate decision today (June 18)

The USD/CHF exchange rate rose modestly after the Federal Reserve left interest rates unchanged on Wednesday, with investors now turning their attention to the Swiss National Bank's upcoming monetary policy decision. It was trading at 0.7988, up slightly from this week’s low of 0.7900.

US dollar jumps after FOMC decision

The USD/CHF pair drifted upwards after the Federal Reserve delivered its first interest rate decision under Kevin Warsh, who became the Chair in March this year.

As was widely expected, the bank left interest rates unchanged between 3.50% and 3.75%. Nine officials noted that they would support hiking interest rates later this year if inflation remained stubbornly high.

The decision came a few days after the US released strong consumer and producer inflation data. According to the Bureau of Labor Statistics (BLS), the headline CPI jumped 4.2%, while the PPI rose 6.5%.

Fed officials are concerned that inflation has remained above the 2% target for over four years. This happened because of Donald Trump’s tariffs and his war against Iran that pushed crude oil prices higher.

Fortunately, there are signs that the war is about to end, with the US and Iran expected to sign a ceasefire agreement on Friday. This explains why crude oil prices have remained under pressure this week, with Brent and the WTI falling below $100.

Traders are now predicting that the Fed will hike interest rates in the October meeting. If this happens, it will bring rates to between 3.75% and 4%, a move that will anger Trump, who installed Warsh at the Fed to slash rates. 

Swiss National Bank decision

With the Fed decision done, analysts are now focusing on the Swiss National Bank, which will deliver its decision later today. Economists believe that the bank will leave rates unchanged at 0%. 

The most recent data showed that Swiss inflation stood at 0.6% in May, comfortably within the bank’s range of between 0% and 2%. This happened as the stronger Swiss franc helped the country to offset the rising oil prices. In a recent note, Bank of America analysts said:

"With those opposing forces from FX and energy prices at play ‌and ⁠Switzerland's low inflation starting point, we think inflation pressures weigh less on the SNB than on most central banks ... Our base case remains the zero‑interest‑rate policy stays in place until end-2027."

USD/CHF technical analysis

USDCHF chart | Source: TradingView

The USD to CHF exchange rate has held steady in the past few weeks, moving from 0.7593 in January to 0.7987 today. It has remained above the ascending trendline that connects the lowest swings since January. 

The pair has formed an ascending triangle pattern, a common continuation sign. It also sits above the 50-day and 100-day moving averages. The Relative Strength Index (RSI) has continued rising and is approaching the overbought level.

Therefore, the pair will likely continue rising in the coming days, with the next key target being the upper side of the triangle at 0.8043. A move above that price will point to more gains towards 0.8167.