USD/CHF Bulls Charge Ahead After SNB Cut: Breakout Above Key Resistance Likely

investing.com:

Last week, Central Banks, including the Bank of Japan, Federal Reserve, Bank of England, and Swiss National Bank held meetings.

The Swiss National Bank's decision was the most surprising, as it opted for a modest 25bp cut despite the market expectation to leave interest rates unchanged.

This led to the weakening of the Swiss currency against major currencies, including the US dollar, reflected in the USD/CHF currency pair.

Despite the initial dovish reaction after the Federal Reserve meeting, the US dollar showed strength by the end of the week, further supporting demand for the USD/CHF pair.

Currently, it seems likely that the uptrend will continue, although there are technical hurdles to overcome.

In March, Thomas Jordan, the current President of the Swiss National Bank, announced his resignation from the position he has held since 2012.

His successor will be inclined to implement interest rate cuts, and the recent 25 bps cut could just be the beginning.

This unexpected move weakened the Swiss franc. The decision was driven by the stabilization of inflation within the target range and optimistic forecasts for the coming years.

The bank's management announced the possibility of intervening in the foreign exchange market, a move not new for the SNB.

Future decisions are likely to hinge on evolving inflation dynamics. Given a decade of experience with zero and negative interest rates, it's highly probable that the USD/CHF trend will continue.

The US dollar index, which measures the currency's strength against a fixed basket of others, continues to rise.

Taking a broader view, there's significant potential for the demand side to push the movement further northward, with the maximum range around the 107 points mark.

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