The Swiss Franc weakens marginally against the US Dollar on Thursday after the release of US inflation data.

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• The Swiss Franc weakens marginally against the US Dollar on Thursday after the release of US inflation data.
• The data shows headline inflation coming out at 3.4%, beating estimates and previous results.
• Core inflation, however, shows less upside pressure and moderates down YoY.

The Swiss Franc (CHF) falls marginally against the US Dollar (USD) on Thursday after the release of mostly higher-than-expected US inflation data. The data suggests the Federal Reserve (Fed) may delay cutting interest rates in order to keep up its war against inflation. Since higher interest rates attract more foreign capital inflows, the news is bullish for the US Dollar.

USD/CHF – the number of Swiss Francs (CHF) that one US Dollar (USD) can buy – rises on Thursday, extending the pair’s short-term recovery rally.

The USD/CHF pair is in a long-term downtrend, however, suggesting the pair is at risk of recapitulating and continuing lower.

US Dollar vs Swiss Franc: 4-hour Chart

The four-hour chart shows the pair pulling back after bottoming at the late November lows. The short-term trend is indeterminate, and given the broader bearish bias ultimately at risk of resuming its downtrend.

The recovery since the November lows has stalled and appears trapped in a range. The speed of ascent of the recovery is slower than the down move that preceded it – a further sign of weakness.

A break below the December consolidation range lows at 0.8465 would probably indicate a resumption of the downtrend back down to the November lows at 0.8332.

It would take a break above the major trendline for the downmove at around 0.8600 to confirm a change in the short-term trend and more upside. But the next target after that would be the 200-four-hour Simple Moving Average (SMA) not much higher at circa 0.8630.

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