- SNB has raised its rates for the first time in 15 years.
- Poor economic data saw the dollar weaken against the franc.
- The price could hit 0.95500 next in the charts.
The USD/CHF forecast turned negative as the pair continued its collapse on Friday after the Swiss National Bank surprised markets by raising interest rates yesterday. The SNB raised rates for the first time in 15 years from -0.75% to -0.25%.
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Investors had expected the SNB to hold rates on Thursday and flag a hike for September, but this was not the case. The US dollar went down by 3.1% against the franc in just one day of trading.
“There was always that room for a surprise from the SNB, but I think most currency traders did not anticipate such aggressive action from the SNB. It was surprising, and it kind of set the tone for the dollar,” said Edward Moya, senior analyst at Oanda.
SNB Chairman Thomas Jordan said rising Swiss inflation, which hit its highest level in about 14 years in May, meant the central bank might have to tighten its policy further.
The USD/CHF pair was also plagued by the poor economic data released from the US, including building permits and initial jobless claims.
USDCHF key events today
With no critical news releases from Switzerland, investors will be keen on the United States. Fed chair Powell is set to speak later in the day, which could cause volatility in USD/CHF. Investors will pay close attention to hints regarding future monetary policy.
After that, the Fed will release its monetary policy report, which discusses current and future monetary policy and economic developments.
USD/CHF technical forecast: Bears aiming at 0.95500
Looking at the 4-hour chart, we see the price has made a sharp move below 0.9700, has pushed back to retest the level, and is currently pushing lower. The price trades well below the 30-SMA, showing a steep bearish trend. The RSI is trading close to the oversold region and looks like it could soon go below the 30 mark.
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The bears are strong and looking to push the price lower. The next level for them would be at 0.95500. This new level would create a series of lower lows and lower highs, confirming the bearish trend.
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