USD/CHF forms double-top after hawkish SNB statement
- The USD/CHF pair has been in a strong bearish trend.
- Thomas Jordan said that the SNB will continue hiking rates.
- The pair will likely continue falling as it forms a double-top pattern.
The USD/CHF price slipped to the lowest point since October 27th as investors reacted to the hawkish statement by Thomas Jordan. It dropped to a low of 0.9885, which was about 2.57% below the highest level on Friday.
SNB to continue hiking
The USD/CHF price continued its downward trend after the hawkish statement by Thomas Jordan of the Swiss National Bank (SNB).
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Jordan made the most visible forex news of the day when he hinted that the bank will continue hiking interest rates. He noted that the bank was considering more hikes or embracing a wait-and-see approach to fight inflation, which rose to 3.0% in October.
Swiss inflation is significantly lower than that of other countries like Germany, France, and Australia. However, it has risen gradually in the past nine straight months and is at the highest point in almost 30 years. Jordan said:
“When faced with large shocks that increase the risk of persistent movements of inflation away from the range, determined action is necessary.”
The SNB has surprised economists this year by raising interest rates two times. Based by Jordan’s statement, economists expect another 0.50% hike in December.
The USD/CHF price has also declined as investors wait for the outcome of today’s midterm elections. Most polls point to a strong Republican sweep in the House of Representatives. There is also a high likelihood that they will take control of the Senate.
Still, analysts believe that the outcome of the election will have no major impact on the American economy.
The USD to CHF price will also react to the upcoming American consumer inflation data scheduled for Thursday. Economists expect the data to show that inflation remained at an elevated level in October. As such, this means that the Fed has a room for more rate hikes in the coming months.
The four-hour chart shows that the USD/CHF price formed a double-top pattern at 1.0145. In price action analysis, this pattern is usually a bearish sign. The current price is slightly above the neckline of the head and shoulders pattern.
It has also formed what looks like a bearish flag pattern. Therefore, the pair will likely have a bearish breakout in the coming days. If this happens, the next key support level to watch will be at 0.9750. A move above the resistance point to watch will be at 0.9950.