The USDCHF pair, at a rate of 0.86754, experiences a significant decline to its lowest point in eight years. This drop is attributed to the unexpected decrease in US inflation, which creates uncertainty regarding the Federal Reserve’s plans for future interest rate increases.

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• USD/CHF plunges to an 8-year low as unexpected slowing US inflation raises doubts about Fed’s future rate hikes.

The pair currently trades last at 0.86754.

The previous day high was 0.8868 while the previous day low was 0.8793. The daily 38.2% Fib levels comes at 0.8822, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.884, expected to provide resistance.

USD/CHF plummeted in the North American session due to data from the United States (US) showing inflation is slowing at a fast pace, which means, the US Federal Reserve (Fed) might refrain from increasing rates twice toward the end of the year. Consequently, the USD/CHF dropped to an 8-year low at 0.8659. At the time of writing, the USD/CHF pair exchanges hands at 0.8682, down more than 1%.

The US Bureau of Labor Statistics (BLS) revealed that inflation in June in the US decelerated sharply, hitting 3.0% YoY, below estimates of 3.1%, as shown by the Consumer Price Index (CPI). Core CPI, which excludes the price of volatile items like food and energy, downtick 0.5%, from 5.3% YoY in May to 4.8% last month, indicating that supply and demand are more balanced. Nevertheless, inflation remains above the US Federal Reserve (Fed) 2% target, though it might refrain the Fed from increasing rates by two times toward the year-end.

In the meantime, the CME FedWatch Tool shows that the odds for a 25 basis points rate increase in the July meeting are at 92.4%, while the chances for additional interest rate increases diminished below 30%.

Hence, the USD/CHF pair extended its losses, as the major has fallen more than 100 pips of 1.30% in the day after hitting a daily high of 0.8794. Failure to crack the 0.8800 figure, alongside weaker data in the US, opened the door to extending the USD/CHF’s downtrend.

Federal Reserve had crossed the wires earlier in the New York session, led by Richmond Fed President Thomas Barking, saying. that inflation is too high and emphasizing he’s comfortable doing more to tackle inflation. Recently, the Minnesota Fed President Neil Kashkari noted that the fight against inflation must be won and that if it gets higher, hikes must be raised.

The US Dollar Index (DXY), a gauge of the buck’s value against a basket of peers, remained downward pressured, exchanging hands near two-year lows. The DXY sits at 100.597, losses 1.04%, undermined by US Treasury bond yields plunge.

From a weekly chart perspective, the USD/CHF remains downward biased, extending its losses past the 2021 yearly low of 0.8757, which exacerbated a drop below the 0.8700 figure. Should be said, the Relative Strength Index (RSI) has turned oversold, though still showing signs the downtrend is solid. That said, USD/CHF’s next support would emerge at the psychological 0.8600 price level, with sellers eyeing a challenge of 2015 low at 0.8300. Conversely, USD/CHF buyers must reclaim 0.8700 if they aim to shift the pair bias from downwards to neutral.

Technical Levels: Supports and Resistances

USDCHF currently trading at 0.8677 at the time of writing. Pair opened at 0.8794 and is trading with a change of -1.33 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 0.8944, 50 SMA 0.8979, 100 SMA @ 0.9062 and 200 SMA @ 0.9272.

The previous day high was 0.8868 while the previous day low was 0.8793. The daily 38.2% Fib levels comes at 0.8822, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.884, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8769, 0.8744, 0.8694
• Pivot resistance is noted at 0.8844, 0.8893, 0.8918

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