USDCHF: Bullish Trend Holds Firm Amid SNB's Aggressive Rate Cut
There's been minimal follow-through on USDCHF's bullish push this morning after the Swiss National Bank cut rates by 50 basis points instead of the expected 25.
The limited reaction is due to the SNB's preemptive approach. They are aggressively cutting rates because inflation is at 0.7%, and with the new rate at 0.5%, the real yield is effectively negative by 30 basis points.The rationale behind this move is to quickly stimulate inflation. The SNB argues that a significant cut now reduces the likelihood of needing negative rates in the future. If their assessment is correct, it could signal a pause in rate cuts, which explains the muted market reaction.
From a technical perspective, the USDCHF trend remains firmly bullish as long as the price stays above 0.8810. If the price dips to around 0.8846, traders will likely step in and push it toward 0.89. The move higher would probably stem from correlations between USD/CHF and its peers, as there is still a strong case for the ECB cutting rates further, which could drag down EUR/USD and, consequently, lift USDCHF.
What is your take on USDCHF?
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
The limited reaction is due to the SNB's preemptive approach. They are aggressively cutting rates because inflation is at 0.7%, and with the new rate at 0.5%, the real yield is effectively negative by 30 basis points.The rationale behind this move is to quickly stimulate inflation. The SNB argues that a significant cut now reduces the likelihood of needing negative rates in the future. If their assessment is correct, it could signal a pause in rate cuts, which explains the muted market reaction.
From a technical perspective, the USDCHF trend remains firmly bullish as long as the price stays above 0.8810. If the price dips to around 0.8846, traders will likely step in and push it toward 0.89. The move higher would probably stem from correlations between USD/CHF and its peers, as there is still a strong case for the ECB cutting rates further, which could drag down EUR/USD and, consequently, lift USDCHF.
What is your take on USDCHF?
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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