FX.co ★ Ambe | USD/CHF

The Swiss National Bank (SNB) took the market by surprise on Thursday with a larger-than-expected 50-basis-point cut to its key lending rate, bringing it down to 0.5%. This marked the fourth consecutive rate cut by the SNB, but the first time the reduction exceeded the typical 25-basis-point adjustments. The move sent the Swiss franc tumbling and propelled the USD/CHF pair to a fresh two-week high near 0.8900. The SNB's decision to cut rates more aggressively than anticipated stemmed from a combination of factors. Firstly, inflationary pressures within the Swiss economy have remained subdued, staying within the central bank's target range of 0-2%. This allowed the SNB to ease monetary policy further. Secondly, SNB President Martin Schlegel had previously hinted at the possibility of more significant rate cuts, stating in late November that "low interest rates and also negative interest rates are not excluded from our toolbox." This dovish stance signaled the SNB's willingness to take decisive action to stimulate economic growth. Meanwhile, the US dollar traded slightly lower as markets anticipated a 25-basis-point interest rate cut by the Federal Reserve at its upcoming policy meeting. The release of the US Consumer Price Index (CPI) data for November, which showed modest growth in rental prices, further reinforced expectations of a rate cut. The headline CPI rose 2.7%, while the core CPI, excluding volatile food and energy prices, increased 3.3%, both in line with market expectations. These figures suggest that inflationary pressures in the US are gradually easing.

The USD/CHF pair has experienced a significant uptrend since the end of September, with prices surging more than 7% to reach a five-month high of 0.9020. Although the pair has recently seen some decline, it remains above the key 0.8955 support level. From a technical perspective, the Moving Average Convergence Divergence (MACD) indicator continues to exhibit positive momentum, suggesting further upside potential. However, the Relative Strength Index (RSI) is currently hovering above the neutral threshold of 50, indicating a potential for a near-term correction. If the bullish trend persists, the USD/CHF pair could challenge the next resistance level at 0.9050, which coincides with the July high. A successful break above this level could open the door for a move towards the 0.9160 level, providing further support for the short-term uptrend.