The USD/CHF pair is rising, currently around 0.8380, as mixed signals emerge from the US economy and global trade tensions continue. It has gained 0.28%, but concerns about the US economic outlook and tariff policies are keeping it from rising further. The US Dollar is finding support amid uncertain global risk sentiment. However, recent economic data raises worries. The University of Michigan’s Consumer Sentiment Index dropped to 50.8, falling short of expectations. Inflation forecasts have increased, with one-year expectations at 7.3% and five-year at 4.6%, indicating growing price pressures.

April PPI Data

The April PPI data was weaker than expected, with headline PPI at -0.5% month-over-month and core PPI at -0.4%. President Donald Trump hinted at new tariffs soon, impacting global trade and US stability. From a technical perspective, USD/CHF is testing a key level at 0.8540. If it breaks above this, it could indicate a trend reversal, aiming for 0.8706. However, if it fails to surpass 0.8540, pullbacks may follow, with support at 0.8320. The RSI is low, suggesting diminishing bearish momentum. A breakout above 0.8540 is needed for a trend change. Overall, the pair is reacting anxiously to a challenging economic environment and political uncertainty. Although the USD/CHF has risen to around 0.8380, this recovery is limited due to the confusing US economic outlook. Investors are hesitant to make decisive moves without clearer direction.

Consumer Sentiment and Inflation Expectations

At first glance, the dollar’s rise seems linked to doubts in global markets. However, looking deeper, the decline in consumer sentiment to 50.8 signals growing unease among households about the economy. This decline may dampen spending intentions and lead to weaker demand. Additionally, rising inflation expectations for both one-year and five-year outlooks complicate the Federal Reserve’s decisions. We are also observing producer prices that fell below forecasts, with both core and headline PPI figures negative for April. These numbers indicate weaker input costs and possible challenges for businesses in maintaining pricing power. Companies may be unable to pass on costs or may be cutting prices to keep market share during uncertain growth. These weak readings create ambiguity in policy expectations, as lower producer prices typically suggest deflation, yet rising consumer expectations paint a different picture. Adding to the pressure are ongoing trade policy discussions. Trump’s tariff comments have sparked fresh concern—markets dislike uncertainty around trade. Although no formal measures have been taken yet, the prospect remains significant. History shows that tariffs don’t just change supply chains; they also impact inflation, something central bankers pay close attention to. On the technical front, resistance at 0.8540 is a critical level. Sellers have consistently stepped in here, while buyers have not shown enough strength to push through. A clear move above could shift market positioning, particularly for those betting against rallies. It would also prompt structural traders to reconsider forecasts, potentially aiming for a retest of 0.8706, which is an important benchmark. On the downside, 0.8320 represents a possible support area should momentum fail. Despite this, the relative strength index indicates that bearish trends are losing power. It hasn’t turned around yet, but the waning downward energy is noteworthy. If the current drift continues without a triggering event, we could end up in a low-volatility range, making it frustrating for directional traders. As we approach the next set of data releases, pay attention to market reactions before and after these announcements. Quick price movements may not last until the New York market close, increasing the chance of intraday reversals. Risk management now involves monitoring not just economic data, but also insights from US policymakers and any unexpected trade developments that could influence the dollar’s direction. Expect short-term price movements to remain sensitive. Liquidity may tighten toward the end of trading sessions as macro concerns persist. This could lead to overshoots around key levels, offering opportunities for quick re-entries. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now