USD/CHF spot forecast for December 2022

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on Dec 1, 2022
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  • The USD/CHF price has plunged by more than 7% in November.
  • The Fed has hinted that it will hike interest rates at a slower pace.
  • The pair will react to the upcoming NFP data.

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The USD/CHF spot price pulled back sharply in November as forex investors refocused on the upcoming Federal Reserve pivot. It tumbled to a low of 0.9360, which was the lowest level since April this year. At its lowest point in November, the pair was about 7.8% below its monthly high.

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Fed pivot ahead

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The USD to CHF exchange rate pulled back as the US dollar index (DXY) dropped. It pulled back from its year-to-date high of $115 to about $104. The sell-off intensified after the US published encouraging inflation data.

As we wrote in this article, data by the Bureau of Labor Statistics (BLS) showed that American inflation retreated by a bigger percentage than expected. Precisely, it dropped from 8.3% in September to 7.7% in October.

Most indicators point to a sustained decline of inflation in the US. Most retailers, including Walmart and Target, announced significant discounts to address their inventories. At the same time, gas prices have retreated in the past few months while the supply chain challenges that existed in 2021 have eased. Indeed, data shows that sea freight charges have dropped sharply in the past few months.

Therefore, with inflation easing, analysts predicted that the Federal Reserve will start slowing the pace of rate hikes in the upcoming meeting. This sentiment was confirmed by Jerome Powell, the Fed Chair. In a statement, he hinted that the bank will continue hiking rates but at a slower pace.

The next key catalyst to watch will be the upcoming US non-farm payrolls (NFP) data. Economists expect the data to show that the economy added over 200k jobs in November. The US will publish the latest PCE data.

Meanwhile, data from Switzerland showed that the PMI declined from 54.9 in October to 53.9 in November. Retail sales dropped by 2.5% in October while consumer inflation remained at 3.0%.

USD/CHF forecast

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usd/chf

USD/CHF chart by TradingView

The daily chart shows that the USD/CHF pair came under intense pressure in the past few weeks. It moved from parity to below 0.9500. It has crossed the 50-day and 200-day moving averages. The two averages are about to make a death cross. 

The USD to CHF price has formed what looks like a bearish flag pattern. Therefore, the pair will likely continue falling as sellers target the next key support level at 0.92500.

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