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USD/CHF Slips on Lower-than-Expected US Inflation Data

The USD/CHF currency pair fell after the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday.

Market Reaction:

  • PCE Inflation Steady YoY: The headline PCE inflation figure matched expectations at 2.7% YoY, but the monthly increase was lower than anticipated (0.2% vs. 0.3% expected).
  • Core PCE Meets Estimates: The core PCE index, excluding food and energy prices, rose 2.8% YoY as expected.
  • Slight Increase in Fed Rate Cut Probability: Despite the data, the odds of a Fed rate cut in September remain low, with a slight increase in likelihood compared to June or July.

Technical Analysis:

  • Bearish Momentum: The USD/CHF’s RSI has dipped into negative territory, and the MACD indicator shows red bars, both suggesting a shift in momentum favoring sellers.
  • Short-Term Outlook Uncertain: The pair has fallen below the 20-day SMA (0.9095), indicating a potentially less positive short-term outlook compared to earlier in the week when it held above all three key SMAs (20, 100, 200).

The lower-than-expected monthly inflation data triggered a decline in the USD/CHF. While the annual figures were in line with expectations, the weaker monthly growth seems to have impacted the US Dollar’s strength. The technical indicators point towards a potential short-term downside for the USD/CHF, but the long-term direction remains uncertain.