The Swiss National Bank cut interest rates yesterday by 25 basis points, in line with expectations, from 0.50% to 0.25%, marking the fifth consecutive cut. The USD/CHF exchange rate continues its upward trend for the third consecutive day, reaching 0.8842 yesterday and currently hovering near 0.8840. However, despite this rise, the U.S. dollar remains down by approximately 3% against the Swiss franc since the beginning of the year.
Declining Economic Indicators in Switzerland
The Consumer Price Index (CPI) recorded an annual growth of 0.3% in February 2025, lower than the previous reading of 0.4%. Additionally, retail sales declined on an annual basis, growing by only 1.3%, which is below expectations (1.6%) and the previous reading (2.1%). Furthermore, the annual GDP growth rate for Q4 of last year slowed to 1.5%, falling short of expectations (1.6%) and the previous reading (1.9%). These figures indicate economic weakness in Switzerland, which may necessitate further interest rate cuts in the coming period.
Technical Indicators for USD/CHF
Regarding technical indicators, they continue to exert pressure on the USD/CHF pair. The Relative Strength Index (RSI) is currently at 44 points, indicating negative momentum. The Positive Directional Movement Index (DMI+) stands at around 14 points, while the Negative Directional Movement Index (DMI-) is at approximately 24 points. The significant gap between these indicators suggests strong selling pressure on the USD/CHF pair.
If the pivot of 0.8806 is broken, the pair may target support levels at 0.8768, 0.8717, and 0.8679. On the other hand, if the price surpasses the pivot point, it could aim for resistance levels at 0.8857, 0.8895, and 0.8946.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
