USD/CHF forecast and SNB interest rate decision preview

The USD/CHF pair has been under pressure in the past few days as investors reflect on the actions of the Federal Reserve and the Swiss National Bank (SNB). It is trading at 0.9316, which is about 1.51% below the highest level this month. The EUR/CHF, on the other hand, has moved from the parity level of 1.00 to the current 1.025.

SNB interest rate decision

The SNB has been busy intervening in the forex market in the past few months. In a report published on Tuesday, the SNB said that its interventions rose to over $22.50 in 2021. That amount was significantly lower than the previous year’s intervention of 110 billion francs.

The bank has prioritized forex interventions as its main monetary tool in the past few years. As a result, these interventions have helped to temper its demand since it is often seen as a safe-haven currency. The SNB prefers a weaker franc in order to support the country’s exporters.

The main catalyst for the USD/CHF and EUR/CHF pairs on Thursday will be the interest rate decision by the SNB. Analysts believe that the bank has a long way before hiking interest rates that currently stands at about -0.75%. This makes it one of the most dovish central banks in the world.

Recent data shows that Swiss inflation is rising slower than in other countries like the United States and the UK. Data by the government’s statistics agency showed that the country’s inflation rose by 0.7% in February compared to the same period in 2021. The prices jumped by 2.2% on an annualized basis. 

That increase compared with the US CPI of over 7.9% and the UK inflation of 5.9%. At the same time, the country has one of the lowest unemployment rate globally.

USD/CHF forecast

The USD/CHF pair remained in a tight range on Wednesday ahead of the upcoming SNB interest rate decision. It moved to a low of 0.9310, which was lower than this month’s high of 0.9460. It has moved slightly below the important resistance level at 0.9370, which was the highest level last week. It has also moved slightly below the 25-day moving average.

Therefore, the pair will likely keep falling as bears target the next key support level at 0.9270. On the flip side, a move above the key resistance at 0.9370 will invalidate this view.