Inflation in the USA is impacting the USDCHF currency pair

12 May 2023 127
Inflation in the USA is impacting the USDCHF currency pair

This week, the fluctuation of the dollar depended on U.S. inflation figures. Prior to the news, the U.S. currency was declining. This event has made corrections in the USDCHF currency pair.

 

The U.S. consumer price index (CPI) for April was 4.9% year-over-year after 5% in March, which was the lowest value since April 2021. This follows from data of the Ministry of Labor in the country.

 

Compared to March, the indicator increased by 0.4% due to higher prices for accommodations, used cars and trucks, and gasoline. At the same time, in general, energy prices decreased by 5.1%, and food prices increased by 7.7%.

 

On May 3, the U.S. Federal Reserve System (Fed) raised its benchmark interest rate by 25 basis points to 5-5.25% per annum. The agency noted moderate growth in economic activity in the first quarter of 2023. Unemployment remains low, while inflation is still higher, the U.S. Federal Reserve said.

 

The size of the discount rate by the central bank in Switzerland is at 1.5% level.

 

Monetary policies differ greatly, but the dominant factor in the pricing of the USDCHF currency pair is the dollar.

 

The University of Michigan Consumer Sentiment Index will be published today at 14:00 GMT. The indicator is a strong macroeconomic indicator that reflects the level of consumer confidence and expectations in the U.S. market. According to forecasts, the index should decrease to the level of 63 from the previous value of 63.5. A decrease in the index could indicate a decline in the U.S. economy, which, in turn, could lead to a possible drop in the U.S. dollar against the Swiss franc.

 

The USDCHF currency pair is in the formation of a triangle pattern on the H1 timeframe. This pattern shows the uncertainty of the market.

 

The curve of the Relative Strength Index indicator (standard values) exceeded the trend line of support, giving an advancing signal of price exit from the triangle pattern in the direction of sales.

 

Signal:

 

Short-term prospects for the USDCHF pair are to sell

The target is at the level of 0.8820.

Part of the profit should be fixed near the level of 0.8870.

The stop-loss is at the level of 0.8970.

 

"Bearish" trend has a short-term character, so the volume of trade should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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