USD/CHF hits weekly low below 0.9120 as US inflation data cools

USD/CHF falls to a new weekly low below 0.9126, sponsored by economic data from the United States (US) showing that inflation is cooling down. Hence,  |  31/03/2023 16:32

• USD/CHF drops as US core PCE rose by 4.6% YoY, below the previous month.
• The University of Michigan’s Consumer Sentiment was below expected.
• USD/CHF Price Analysis: Presses toward 0.9100, but sellers struggle to break that support below.

USD/CHF falls to a new weekly low below 0.9126, sponsored by economic data from the United States (US) showing that inflation is cooling down. Hence, bets that the US Federal Reserve (Fed) might pause its tightening cycle, increasing, meaning the greenback would be under pressure. At the time of writing, the USD/CHF is trading at 0.9127, below its opening price.

US core PCE edges lower, cementing the case for a Fed’s pause

The Federal Reserve’s preferred gauge for inflation, the core Personal Consumption Expenditure (PCE), rose by 4.6% YoY, below the previous month’s 4.7%. On a monthly basis, inflation that excludes food and energy rose by 0.3%, below estimates of 0.4%.

Of late, the University of Michigan’s (UoM) Consumer Sentiment was below estimates of 67 and came at 62. According to Joanne Hsu, director of the survey, said, “Overall, our data revealed multiple signs that consumers increasingly expect a recession ahead.” The same study showed that inflation expectations for one year stood at 3.6%, down from 3.8%, while for a 5-year horizon, consumers estimate inflation at 2.9%.

The USD/CHF extended its losses amidst positive news on the US front. Although the Boston Fed President Susan Collins welcomed the data, she said it hadn’t changed her outlook, adding that the Fed has more work to do.

On the Switzerland front, the Swiss National Bank (SNB) continued to tighten monetary conditions when it raised rates by 50 bps on March 23 toward the 1.50% area. Furthermore, Retail Sales in February rose by 0.3% compared with the previous year, giving a leg-down to the USD/CHF pair.

USD/CHF Technical analysis

Even though the USD/CHF continued to press towards the 0.9100 figure, the sellers could not register a decisive break below the latter. Technical indicators like the Relative Strength Index (RSI) and the Rate of Change (RoC) are flat, suggesting that sellers are jumping from the boat. However, if the USD/CHF dives below 0.9100, that would open the door to challenge the YTD low at 0.9059. On the flip side, buyers reclaiming 0.9150 could pave the way for a recovery to 0.9200 and beyond.