In a surprising turn of events, the USD/CHF pair managed to inch higher to 0.8830 after two consecutive sessions of losses. This upward movement comes in the midst of fluctuating Personal Consumption Expenditures (PCE) figures released by the United States, with PCE dipping to 2.5% year-on-year. Despite this mixed data, dovish bets on the Federal Reserve continue to present a challenge to the USD.
Looking at the bigger picture, the slight decline in inflation combined with strong economic growth in the US suggests that the Fed may not be as aggressive in cutting interest rates as the market currently expects. This could potentially lead to an upward revision of Fed funds rate expectations, boosting the USD and Treasury yields in the process.
Technical Analysis and What to Expect Next
The technical outlook for USD/CHF remains bearish, with the pair closing its fourth consecutive losing week and tallying a 1.50% loss since late June. Trading below key moving averages and with indicators in a negative trajectory, the pair faces support levels at 0.8750 and 0.8730, while resistance levels are at 0.8800, 0.8830, and 0.8850.
What Does This Mean for Your Investments?
For investors, the current scenario suggests a cautious approach when trading the USD/CHF pair. While the recent uptick may offer some relief to bearish sentiments, the overall outlook remains uncertain due to the ongoing dovish bets on the Federal Reserve. Keeping a close eye on economic indicators and Fed announcements will be crucial in making informed investment decisions in the coming weeks.