CHFJPY: Price Outlook Following CPI Data

The Swiss Franc is currently facing significant challenges as expectations grow for the Swiss National Bank (SNB) to reduce interest rates. Recent inflation data revealed a persistent weakness in the economy, prompting speculation about a potential interest rate cut of 50 basis points. In November, Swiss inflation rates remained unchanged at -0.1% month-on-month, matching the figure from October. The annual inflation rate saw a slight increase to 0.7%, yet it still fell short of the anticipated 0.8%. This ongoing low inflation situation creates room for the SNB to further cut rates in an effort to support economic growth.

Economic experts have voiced concerns regarding Switzerland's economic performance, particularly highlighting sluggish growth in the export sector and low levels of capacity utilization. Economists like Dr. Karsten Junius from Bank J. Safra Sarasin argue that decisive action is necessary from the SNB, including rate cuts, to alleviate economic pressures. The forecasts suggest the central bank may implement a 50 basis point reduction in December, followed by additional cuts in 2025, aiming to drive rates down to 0%.

While negative interest rates are not presently being considered, SNB President Schlegel has indicated that they cannot be completely dismissed. Moreover, there are suggestions that the SNB may need to intervene in foreign exchange markets to weaken the Swiss Franc and mitigate deflationary pressures if the situation persists. Amidst a challenging economic backdrop, the Franc continues to struggle against major global currencies.

CHFJPY – Weekly Timeframe Analysis

Taking a closer look at the CHFJPY currency pair on the weekly timeframe, there is a noticeable trendline support that the price is currently approaching. Additionally, there exists a drop-base-rally demand zone that coincides with the 76% Fibonacci retracement region. This alignment with the trendline support suggests a potential long-term bullish sentiment; however, further confirmation is warranted through the daily timeframe analysis.

Daily Timeframe Insights

Examining the daily timeframe chart, a Swing-Break-Retest (SBR) pattern appears to be forming, with the demand zone positioned directly above the 88% Fibonacci retracement level. This signals a likely reaction from the identified demand zone, indicating a potential entry point for bullish traders.

Analyst Expectations:

• Direction: Bullish
• Target: 176.801
• Invalidation Level: 164.709

CHFJPY, CPI, SNB