The Swiss National Bank (SNB) was in play today as they raised interest rates to 1.75% from 1.5% in response to medium-term inflation increases. The bank stated that further rate hikes might be necessary to maintain price stability, focusing on selling foreign currency in the present environment. Adjusted inflation forecasts are now at 2.2% for 2023 and 2024.
SNB Chairman Thomas Jordan disputed the idea that the current policy tightening was a mistake, suggesting that further tightening may occur, albeit gradually. This approach will be reconsidered in September. Despite monetary tightening strengthening the Swiss franc, Jordan highlighted the rising underlying inflation pressure and warned of inflation potentially exceeding 2%. He also indicated that higher rents driving inflation won't deter future rate hikes.
The rate hike comments caused up-and-down volatility in the European morning session. The high price for the USDCHF in the European morning session found resistance against the 100-hour moving average (blue line in the chart above), but the subsequent decline stalled ahead of the low from Monday's trade and the natural support near the 0.8900 level. The low price today reached 0.89057 – within 6 pips of that low and natural support level.
Since the low, the price has moved back to the upside and more recently has extended above and away from its 100-hour moving average of 0.89551. That moving average is now close support. Stay above is more bullish technical.
On the top side, there is a swing area between 0.89694 and 0.897692 to maneuver through. Above that and the falling 200-hour moving average of 0.89848 is shaping up as a key resistance target to get to and through if the buyers are to take more control.
Going back in time on the hourly chart above, the price rallies have stalled against (or near) that moving average level (green line in the chart above). That increases the moving average's importance going forward. Clearly, it has been levels that sellers have been leaning against over the last 7 or so trading days.
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