The USD/CHF has been tight lately as investors focus on the Federal Reserve and the Swiss National Bank (SNB) actions. It is trading at 0.9316, 1.51% below its highest in March. The EUR/CHF, on the other hand, has moved from 1.00 to 1.025
SNB interest rate decision
The SNB has had interventions in the forex market in the past few months. On Tuesday, the interventions rose to over $22.50 in 2021, lower than the previous year’s intervention of 110 billion francs.
The bank has used forex interventions as its main monetary tool in the past few years. Hence, the interventions enabled tempering its demands since its mostly seen as a safe haven. The SNB prefers a weaker franc to support the country’s exporters.
On Thursday, the SNB will announce its interest decision, a major impetus for the USD/CHF and EUR/CHF pairs. Analysts expect the bank does not have enough muscle to hike rates since its current stand at -0.75%, making it one of the most dovish central banks globally.
According to recent data, Swiss has a slower inflation increase as compared to the US or UK. The government’s statistics agency data indicated a 0.7% inflation growth in February compared to the same period last year. Prices rose by 2.2% on an annualized basis.
According to US CPI data, the rise is over 7.9%for US and a UK inflation of 5.9%. Concurrently, the country has one of the least employment rates in the world.
The USD/CHF pair maintained under pressure on Wednesday ahead of the upcoming SNB interest rate decision. It moved to a low of 0.9310, lower than March’s 0.9460 highest. It has moved slightly below the significant resistance level at 0.9370, the highest level last week. It has moved slightly below the 25-day moving average.
Thus, the pair may continue dropping as bears target the next key support level at 0.9270. on the flip side, a move above the key resistance at 0.9370 will discredit this view.