SNB Unexpectedly Lowers Interest Rate from 1.50% to 1.25%
Today, it was announced that the Swiss National Bank (SNB) decided to lower the interest rate to 1.25%. According to ForexFactory, the analyst consensus had expected the rate to remain at 1.50%, making this decision a surprise.
According to SNB Chairman Thomas Jordan:
Inflation in Switzerland is decreasing;
In recent weeks, the Swiss franc has significantly strengthened due to geopolitical tensions, and the SNB is prepared to be active in the Forex market if necessary.
The market's reaction to the SNB's decision and the statements from its chairman resulted in a sharp weakening of the Swiss franc. Specifically, the USD/CHF rate rose by approximately 0.7% in the first few minutes.
Today's technical analysis of the USD/CHF chart shows:
From the beginning of 2024 to May 1 (point B), the market was in an uptrend (shown by the blue channel).
From May 1 to today, the USD/CHF price decreased, forming a descending channel (shown in red).
The downward movement since May 1 may be a correction within a larger upward trend that began from the low at point A, reached on December 28.
Today's upward reversal on the unexpected news from the SNB may indicate the end of the BC correction. If so, the correction was slightly less than the classic 50%.
If the hypothesis about the end of the correction is correct, it is possible that the USD/CHF price will return to the blue ascending channel. This scenario could be hindered by resistance lines the median and upper boundary of the red channel. Additionally, the psychological level of 0.900 is seen as an important resistance.
Read more: https://fxopen.com/blog/en/oa-snb-unexpectedly-lowers-interest-rate-from-1-50-to-1-25/
Text source: Forex Trading Blog
