USDCHF Rises As Fed Implements Another Rate Cut

Fundamental Analysis

* Expected Cut: The USD/CHF pair has edged higher as markets absorb the Federal Reserve’s expected 25-basis-point rate cut. This latest quarter-point reduction, announced Thursday, follows a larger 50-basis-point cut from early September. Fed officials noted that the labor market has “generally eased,” with inflation nearing the central bank’s 2% target. While this additional cut met market expectations and added stability to trading, the focus now shifts to the likelihood of another reduction in December. According to the CME FedWatch Tool, there is currently a 67% probability of an additional 25-basis-point cut on December 18. However, investors remain divided, with some speculating that the Fed may pause after November.

Technical Analysis

* Technical Breakout: USDCHF was traded higher following prior breakout above the previous resistance level 0.87305. MACD which illustrate bullish bias signal suggest the pair to likely further extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 0.88900. Conversely, a potential reversal is also to be expected and the price could head back towards 0.85650 after it breach back below the level 0.87305.

Potential Risks

As the week wrapped up with significant events that have impacted the market, attention will shift to the upcoming week’s economic data releases, which are expected to provide further insights into market trends and potential policy shifts.

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Monitoring

Stay updated on US and Switzerland data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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