USD/CHF forecast ahead of the SNB and Fed rate decision

By:
on Jun 15, 2022
  • The USD/CHF pair rose to its parity level on Tuesday.
  • Focus is on the upcoming Fed and SNB decisions.
  • The uptrend will likely continue in the near term.

The USD/CHF price rose to parity for the first level since May ahead of the upcoming interest rate decisions by the Federal Reserve and the Swiss National Bank (SNB). It is trading at 1.0004, which is slightly below the year-to-date high of 1.0065. The pair has jumped by more than 4.8% from its lowest level this month.

SNB and Fed decision

The USD/CHF and EUR/CHF pairs have been in an uptrend as investors wait for key decisions by the Fed and SNB.

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Analysts believe that the SNB will conclude its two-day meeting on Thursday of this week. Analysts believe that the central bank will leave its interest rate unchanged. However, unlike in the past meeting, they believe that the bank will signal that it will hike rates by 0.25% in its September meeting.

This will be a major change of tune, for a central bank that has maintained relatively dovish tone for more than a decade. It has lowered rates to minus 0.75% and spent billions of dollars devaluing the Swiss franc.

Still, like all central banks, the SNB is battling a period of high inflation. Data published recently shows that the headline inflation rate has risen by more than 2% while producer inflation has also surged. The unemployment rate remains at a record low of 2.1%.

The USD/CHF price reached parity level ahead of the upcoming interest rate decision by the Federal Reserve. Analysts expect that the bank will hike interest rates by 0.75%, the biggest increase in decades.

The rate hike comes at a time when the US is seeing strong inflation pressures. The headline consumer price index jumped to a 41-year high of 8.6%. Core inflation has also edged upwards.

USD/CHF price forecast

usd/chf

The daily chart shows that the USD/CHF price has been in a strong bullish trend since it bottomed at 0.9538. This price was along the trendline shown in green. Now, it has moved above parity and is approaching its YTD high.

Therefore, the pair will likely continue rising as bulls target the key resistance level at 1.0100. A move above the YTD high of 1.0063 will have invalidated the double-top pattern that is forming. This view is in line with my previous USDCHF prediction.

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