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USD/CHF Continues To Be Defensive, With Attempts To The Upside Being Limited Below 0.8760
The dollar maintains its bearish bias as attempts to recover are limited at 0.8760. March Fed rate cut speculation is exerting a downward pressure on the US dollar. An unexpectedly weak Swiss CPI is anticipated to exert pressure on the CHF.
Amid four-month lows, the US Dollar has encountered support just below the 0.8760 resistance area, thwarting its initial attempt at a modest recovery that was observed early on Monday.
A resurgence in the pair occurred throughout the Asian trading session. Despite market expectations that the Fed's tightening cycle has come to an end, caution prevails in light of a series of crucial US employment figures that will determine the likelihood that the bank begins reducing interest rates in early 2024.
On Friday, a weaker-than-anticipated US ISM manufacturing PMI and Fed Chair Powell's cautious tone regarding further tightening bolstered the notion that the impact of elevated interest rates is beginning to manifest in the broader economy. This increased expectations for interest rate reductions in March and depreciated the US Dollar globally.
The CPI for November in Switzerland indicates that inflation is declining in excess of expectations. The annual increase in consumer prices was 1.4%, the smallest increase in two years, as monthly inflation declined to negative levels. This effectively eliminates the possibility of another SNB rate increase at their December 14 meeting, thereby reducing bullish pressure on the Swissie.
At present, the technical picture is one of indecision, with attempts to the upside being capped at 0.8760 in front of 0.8815. The levels of support are 0.8660 and 0.8560.
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