In the world of forex trading, the USD/CHF pair experienced a downturn during Friday’s session. After briefly rising to 0.9070, it plummeted to 0.9016. This shift followed the release of US inflation data, which showed the Personal Consumption Expenditures (PCE) Price Index holding steady at 2.7% year-over-year in April, in line with expectations. The Core PCE Price Index, which excludes volatile food and energy prices, also rose by 2.8% year-over-year, in line with analysts’ estimates. However, the monthly variation was lower than expected at 0.2%, below the anticipated 0.3%.
The lower-than-expected monthly variation in US inflation data has led to a weakening of the USD/CHF pair. Despite this, the odds of a Federal Reserve rate cut have only slightly increased, with a higher likelihood of the first rate cut occurring in September. The probabilities of rate cuts in June and July remain low. Technical analysis of the USD/CHF pair shows that the Relative Strength Index (RSI) has shifted into negative territory, indicating a momentum shift favoring sellers. Additionally, the Moving Average Convergence Divergence (MACD) is displaying red bars, signaling a growing bearish momentum.
Earlier in the week, the USD/CHF pair had shown strength by staying above the 20, 100, and 200-day Simple Moving Averages (SMAs). This positioning had indicated a bullish trend with dominance by buyers. However, the recent downturn has caused the pair to lose its position above the 20-day SMA at 0.9095, suggesting a less positive short-term outlook. The market may be anticipating a less aggressive stance from the Fed following the US inflation data release, leading to some uncertainty in the USD/CHF pair’s movement.
Overall, the USD/CHF pair has experienced a shift in momentum due to lower-than-expected US inflation data. While the probabilities of a Federal Reserve rate cut have increased slightly, the likelihood of rate cuts in June and July remains low. Technical analysis indicates a bearish momentum in the short term for the USD/CHF pair, with the RSI in negative territory and the MACD displaying red bars. Traders and investors will continue to monitor the situation and adjust their strategies accordingly as the market reacts to changing economic data and Fed policy.
