USD/CHF – An attempted hawkish hold from the SNB but markets not buying it

  • SNB leaves its policy rate unchanged at 1.75%
  • Chair Jordan signals further hikes likely won’t be necessary
  • USDCHF testing major resistance level after decision

The SNB refrained from raising interest rates earlier today, instead signaling that sufficient tightening has taken place in order to get inflation back to below 2% over the forecast horizon.

While inflation is already well below 2%, there was an expectation that the central bank would hike again and in effect mirror the actions of the ECB before calling it a day.

The decision did see the Swiss franc weaken against the euro, as you’d expect, despite Chair Jordan’s attempts to strike a hawkish tone in warning rates could still rise again if they deemed it necessary.

That seems very unlikely now though, instead, it will soon become a question of when we can expect rate cuts rather than hikes.

Another bullish breakout coming?

The dollar has been in a downtrend against the Swiss franc for much of the last 10 months but a breakout earlier this month signaled a change may be underway.


Source – OANDA on Trading View

Having broken above the descending channel, the pair is now testing the 200/233-day simple moving average band and it’s already seeing some resistance.

A break above 0.91 could be a very bullish move as not only would it represent a move above that key moving average band, but it would also break a key level of support and resistance from this year.

There are perhaps some signs of weakness appearing in the momentum indicators, which would be understandable given the significance of 0.91.

If we do see a pullback, 0.8820-0.8860 could be interesting, being a previously important area of support and resistance and roughly coinciding with the 55/89-day SMA band.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam