USD/CHF prediction ahead of the Fed and SNB rate decisions

The USD/CHF price rose for the second straight day as the focus shifts to the upcoming meetings by the Swiss National Bank (SNB) and the Federal Reserve. It rose modestly to a high of 0.9670, which was slightly above this week’s low of 0.9485. It has risen by more than 6% this year, making Swiss franc to become the best-performing G10 currency.

Fed and SNB interest rate decisions

The first major catalyst for the USD/CHF price will be the upcoming meeting by the Federal Reserve. This meeting will start on Tuesday and conclude on Wednesday evening. Analysts expect that the bank will continue tightening in the coming months.

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Precisely, analysts believe that the bank will hike rates by 0.75% for the third straight time. This increase will bring the total year-to-date hike to 300 basis points. A small corner of Wall Street analysts are advocating for the Fed to deliver an unprecedented 100 basis point rate hike in a bid to fight the soaring inflation.

As we wrote in this article last week, America’s headline and core inflation made a surprise increase in August of this year. That was a surprise since analysts were expecting that inflation would drop slightly since gasoline prices retreated.

The next key catalyst for the USD/CHF price will be the upcoming interest rate decision by the Swiss National Bank (SNB). The central bank decided to surprise the market in July when it decided to hike interest rates for the first time in more than a decade. Most importantly, the bank decided to hike rates by 0.50%.

Recent data showed that the Swiss unemployment rate continued tightening as it dropped to 2.3%. At the same time, inflation has continued rising although it remains substantially lower than in other European countries. Therefore, there is a likelihood that the SNB will decide to hike by 0.50%.

USD/CHF price forecast

The daily chart shows that the USD/CHF price has been in a broad downward trend in the past few weeks. In this period, the pair has formed a downward channel that is shown in black. It is currently between this channel. 

The pair has moved to the 25-day and 50-day moving averages. Therefore, there is a likelihood that the pair will continue rising as bulls target the next key resistance point at 0.9800 ahead of the FOMC decision.