USD/CHF forecast: signal ahead of CPI, FOMC, SNB decisions

The USD/CHF exchange rate will be in the spotlight this week as the market reflects on key economic events from the US and Switzerland. The pair retreated to a low of 0.8766 on Tuesday morning, a few points below last week’s high of 0.8820.

US inflation, SNB, and Fed decision

The USD to CHF pair will be in focus because of three important macro events this week. First, the Bureau of Labor Statistics (BLS) will publish the latest Consumer Price Index (CPI) data on Tuesday.

This is an important report that looks at the country’s inflation, a core part of the Federal Reserve’s dual mandate. Data compiled by Investing.com shows that the consensus is that inflation dropped from 3.2% in October to 3.1% in November.

Core inflation, a key gauge that excludes the volatile food and energy products, is expected to come in at 4%. I expect that the headline CPI dropped to 2.9% while core inflation moved to 3.9%. 

Second, the biggest USD/CHF news of the week will come out on Wednesday when the Federal Reserve will conclude its two-day meeting. In it, the bank is expected to set the tone for what to expect in the coming months.

The Fed Rate Monitor tool has a 99% chance that the Fed will leave rates unchanged between 5.25% and 5.50%. Jerome Powell will, therefore, push back against the possibility of a rate cut in the coming months as most economists expect. Besides, inflation remains much higher than the Fed’s target of 2.0%.

Finally, the Swiss National Bank (SNB) will conclude its meeting on Thursday. The bank will also leave rates unchanged and point to a prolonged pause even as Swiss inflation continues falling. The headline CPI dropped to 1.9% in October, lower than the target of 2.0%.

The other important economic data that could move the USDCHF will be the US Producer Price Index (PPI) data, and retail sales numbers.

USD/CHF technical analysis

USDCHF chart by TradingView

The USD/CHF exchange rate has pulled back in the past few days after it formed a small double-top pattern at 0.8820. It has also formed an ascending channel, which is shown in red. Also, the pair is consolidating at the 50-period and 25-period moving averages while the MACD has pointed downwards.

Therefore, the outlook for the pair is bearish ahead of the Fed and SNB decisions. A bearish breakout could see it drop to this month’s low of 0.8867.