Swiss Franc Weakens after Inflation News


Inflation in the country fell in February to its lowest level in nearly two-and-a-half years, data from Switzerland's Federal Statistical Office showed on Monday. Although consumer prices rose 1.2% compared to a year earlier, there is reason to believe that inflation is slowing down compared to the 1.3% recorded a month earlier.

Reuters writes that the Swiss National Bank has kept inflation rates within the target range since May 2023, despite rising rents, sales taxes and energy prices. And the latest news makes it more likely that the SNB will cut rates at its next meeting, scheduled for March 21.

Thus, market participants can expect a looser policy and an affordable franc — which is why the CHF has weakened against a number of currencies. For example, the EUR/CHF rate has reached its highest level since November 2023.

→ the price has broken through the downward channel (shown in red), which has been in effect since last summer — it seems that it is already losing relevance;
→ since the beginning of the year, the rate has already increased by more than 3.5%, which allows us to outline trend lines (shown in blue);
→ levels 0.94730 and 0.95580 changed their behaviour from resistance to support;
→ daily RSI indicates that after strong growth, the market is in the overbought zone, which creates the preconditions for the formation of a correction.

If the growth continues, an important test of the seriousness of the bulls’ intentions may be the level of 0.96800 – near which important reversals in the EUR/CHF price were previously formed.

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