USD/CHF retreats to parity post-US data

• The Swissy retreats to the parity level on the back of softer US inflation readings.
• The USD/CHF is trading close to one-year highs on the back of strong US dollar demand and loose monetary policy in Switzerland.

The USD/CHF is trading at around 1.0000 down 0.45% on Thursday as the US inflation came slightly below expectations for the month of April. 

Earlier in the Asian and European session, the Swissy tried to break above the 1.0050 level but the bears took the upper hand and drove the market back to the parity level. The acceleration down to the 1.0000 level was driven by the somewhat lower reading in the US inflation. Indeed, the US core Consumer Price Index year-on-year for April came below expectations at 2.1% versus 2.2% forecast by analysts. However, the data is still above the 2% Fed’s inflation target.

The Swissy has gained almost 900 pips since mid-February as the monetary divergence between the hawkish Federal Reserve and the dovish Swiss National Bank compounded the US dollar strength backed by the policy normalization in the United States. The market is expecting the Fed to hike at least three times in 2018 and traders have been rushing to buy the greenback.

USD/CHF 4-hour chart 

The trend is bullish and the pair is trading above its 50, 100 and 200-period simple moving averages on the 4-hour time frame, suggesting a strong upward momentum. Immediate support is seen at the parity level, 1.0000 and at 0.9950 psychological level. To the upside, bulls will likely meet resistance at the 1.0050 one-year high, if broken 1.0100 previous swing high should become the next scaling point to the upside.