USD/CHF Forecast as Swiss Inflation and Retail Sales Soar

The USD/CHF price rallied to the highest level since July 15 even after the relatively strong Swiss consumer inflation data. It rose to 0.9860, which was about 5.2% above the lowest level in August of this year.

Swiss inflation rises

The USD/CHF exchange rate continued rallying even after the latest Swiss inflation data. According to the country’s statistics agency, the headline consumer inflation rose by 0.3% in August after rising by 0.5% in the previous month. That decline was higher than the median estimate of 0.2%. 

As a result, the CPI translated to an annualized increase of 3.5%, which was higher than the previous 3.4%. It was also higher than the median estimate of 3.4%. In addition, it was the biggest increase in more than a decade, 

Additional data from Switzerland showed that the soaring prices did not impede spending. Retail sales rose from 0.7% to 2.6%, which was better than the median estimate of 0.9%.

Therefore, these numbers imply that the Swiss National Bank (SNB) will continue hiking interest rates in the coming months. It has already hiked by 0.50% this year.

The next key catalyst for the USD/CHF exchange rate will be the upcoming American non-farm payrolls data. Economists expect the data to show that the economy added over 300k jobs in August while the unemployment rate remained at 3.5%. Still, there is a likelihood that the economy added more jobs than expected.

USD/CHF forecast

The four-hour chart shows that the USD/CHF price has been in an upward trend in the past few weeks. It rose above the important resistance level at 0.9650, which was the highest level on August 5. It has moved above the 25-day and 50-day moving averages. The pair has also formed a V-shape pattern that is shown in black. 

Therefore, the pair will likely keep rising as bulls target the next key resistance level at 1. A drop below the support at 0.9800 will invalidate the bullish view.