USD/CHF ascends amid sticky inflation fears and rising yields from US PCE figures

Share:
  • The USD/CHF pair currently hovers near the 0.8750 level with marginal gains after hitting a low on July 31, earlier in the session of 0.8685.
  • US PCE figures showed no surprises in October but warned markets about stubborn inflation.
  • Rising yields lured investors to the USD, whose DXY index rose to 103.50, up by 0.50%.

The USD/CHF started the Thursday trading session negatively, dropping to 0.8685, setting fresh multi-month lows but then settling around 0.8750, courtesy of a strengthening of the US Dollar. Among the catalysts inciting this uptick are the US Personal Consumption Expenditures (PCE) figures warning about sticky inflation and surging yields fueling the Dollar's demand.

In that sense, the US Bureau of Economic Analysis reported that the annual PCE Price Index for October remained at 3%, showing a slight decrease from the previous rate of 3.4%. Similarly, the annual Core PCE Price Index for October matched consensus expectations at 3.5%, signalling a decline from the preceding rate of 3.7%. These figures have tempered market enthusiasm and support the cautious stance of the Federal Reserve (Fed) as they seek more evidence of inflation declining.

Recently, Fed officials refrained from calling a victory on inflation and argued that the bank needed to see more evidence of inflation cooling down in order to end the tightening cycle. It is not very likely that the Fed will hike in the next December meeting, but the question arises of how long it will maintain rates at restrictive levels. It will all come down to the incoming data, and on Friday, the US will report the Institute for Supply Management’s (ISM) Manufacturing PMI for November. Chair Powell will also be on the wires and investors will look for any evidence on forward guidance.

Elsewhere, the US government bond yields are rising, with the 2-year rate standing at 4.71%  and the 5 and 10-year yields at 4.29% and 4.34%, respectively.

USD/CHF levels to watch

Based on the indicators on the daily chart, the selling momentum appears dominant in the current pair, and sellers seem to be taking a break. Specifically referring to the Relative Strength Index (RSI), a flat oversold condition signals a strong bearish pressure but hints at a potential reversal. This is further emphasised by the Moving Average Convergence Divergence (MACD), where flat red bars support the sellers' scenario.

The Simple Moving Averages (SMAs) paint a similar picture. The forex pair resides below the 20, 100, and 200-day SMAs, a condition usually characteristic of a bear-controlled marketplace. But it's worth noticing that bears are currently taking a breather, which could lead to an upcoming temporary bullish pullback. Yet, the underlying trend remains strongly bearish since the pair managed to hit lows last seen in late July earlier in the session. 


Support Levels: 0.8725, 0.8685, 0.8650.
Resistance Levels: 0.8800, 0.8830, 0.8900.


USD/CHF daily chart

 

USD/CHF

Overview
Today last price 0.875
Today Daily Change 0.0011
Today Daily Change % 0.13
Today daily open 0.8739
 
Trends
Daily SMA20 0.8907
Daily SMA50 0.8999
Daily SMA100 0.8893
Daily SMA200 0.8975
 
Levels
Previous Daily High 0.8785
Previous Daily Low 0.872
Previous Weekly High 0.8875
Previous Weekly Low 0.8811
Previous Monthly High 0.9244
Previous Monthly Low 0.8888
Daily Fibonacci 38.2% 0.8745
Daily Fibonacci 61.8% 0.876
Daily Pivot Point S1 0.8711
Daily Pivot Point S2 0.8684
Daily Pivot Point S3 0.8647
Daily Pivot Point R1 0.8776
Daily Pivot Point R2 0.8812
Daily Pivot Point R3 0.884

 

 

Share: Feed news