USD/CHF Breaks Range Ahead of SNB Meeting, Potential for Further Volatility
USD/CHF is rising significantly ahead of Thursday's Swiss National Bank (SNB) policy meeting. Recent declines in Swiss inflation and economic growth raise the possibility of an SNB shift towards a less hawkish stance.
Key Factors:
- Weakening Inflation and Growth: Falling inflation and slower economic growth suggest the SNB may need to ease policy, potentially through rate cuts.
- Market Speculation: Traders are pricing in a 29% probability of an SNB rate cut, weighing on the Swiss Franc (CHF).
- Potential Rate Cut Impact: If the SNB cuts rates, the CHF would likely weaken, driving USD/CHF higher.
Technical Outlook:
- Range Breakout: USD/CHF has decisively broken above a recent trading range, suggesting potential for further upside.
- Fibonacci Targets: The initial upside targets are 0.8992 (0.618 Fibonacci extrapolation) and 0.9052 (full range height extrapolation).
- Downside Risks: A decisive break below the range low at 0.8729 could signal a short-term trend reversal and deeper decline, targeting 0.8632 and potentially 0.8577.