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USD/CHF Pairs Gain Steam Following Trump’s Tariff Proposal Sparks Market Responses

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  • January 22, 2025
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The USD/CHF currency pair increased above 0.9050 and rebounded to 0.9070 early in European trading on Wednesday following a generally positive US Dollar as former President Donald Trump floated the idea of tariffs. Mr. Trump called for 25% duties on trading partners such as Canada, Mexico, China, and the EU due to economic and geopolitical reasons. Analysts suggest these actions could elevate inflation, reducing the likelihood of multiple Federal Reserve rate cuts this year, further supporting the USD. Meanwhile, geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas developments, have boosted safe-haven flows, potentially benefiting the Swiss Franc. However, the Swiss National Bank’s dovish stance, with rates at 0.5%, continues to weigh on the CHF, presenting a mixed outlook for the USD/CHF pair. KEY LOOKOUTS • Potential 25% duties on key trading partners could bolster USD strength and impact global trade dynamics. • Inflation risks might reduce the likelihood of multiple rate cuts in 2025, further supporting the USD. • Continued dovish stance, with interest rates at 0.5%, could weigh on the CHF despite safe-haven flows. • Ongoing Russia-Ukraine conflict and developments in the Israel-Hamas ceasefire talks remain crucial for safe-haven currency dynamics. The USD/CHF pair regained strength, climbing above 0.9050 and reaching 0.9070 during early European trading, fueled by a stronger US Dollar following former President Trump’s tariff announcements. Proposals for 25% duties on trading partners, including China, Mexico, and the EU, raised concerns over inflationary pressures, potentially limiting the Federal Reserve’s rate cuts this year and boosting USD demand. Meanwhile, the Swiss Franc faces mixed influences as geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas negotiations, support safe-haven flows, while the Swiss National Bank’s dovish stance, with rates at 0.5%, continues to weigh on the currency. This complex interplay of global trade policies, central bank strategies, and geopolitical developments will remain key to the USD/CHF outlook. The USD/CHF pair rebounded above 0.9050, driven by USD strength following Trump’s tariff proposals on key trading partners. Geopolitical tensions boost safe-haven flows, while SNB’s dovish stance weighs on CHF. • The pair rebounded above 0.9050, reaching 0.9070 during early European trading hours. • Announcements of 25% duties on trading partners like China, Mexico, and the EU boosted the US Dollar. • Potential tariffs could drive inflation, reducing the likelihood of multiple Federal Reserve rate cuts in 2025. • SNB’s dovish stance, maintaining rates at 0.5%, continues to weigh on the Swiss Franc. • Conflicts like Russia-Ukraine and Israel-Hamas influence safe-haven flows, supporting the CHF. • A tug-of-war between safe-haven demand for CHF and USD strength due to tariff expectations shapes the pair’s movement. • Investors are closely watching global trade developments, central bank policies, and geopolitical issues to gauge USD/CHF trends. The USD/CHF pair climbed above 0.9050 and reached 0.9070 during early European trading hours, recovering from a two-day losing streak. This rebound was fueled by a stronger US Dollar following former President Donald Trump’s announcement of potential tariffs on key trading partners, including China, Mexico, and the European Union. The proposed 25% duties by Trump are expected to start from as early as February, with inflationary concerns. Analysts believe that the Federal Reserve will then reduce the rate cuts anticipated for 2025 and support the USD further. Such trade policies indicate the impact they have on currency markets worldwide as the USD keeps gaining strength. USD/CHF Daily Price Chart. Source: TradingView Prepared By ELLYANA Meanwhile, the Swiss Franc faces a complex set of influences. On one hand, geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas ceasefire negotiations, have increased safe-haven demand, supporting the CHF. On the other hand, the Swiss National Bank’s dovish stance, maintaining rates at 0.5%, continues to weigh on the currency. This divergence creates a mixed outlook for USD/CHF, as global trade uncertainties and monetary policies play critical roles. Investors will closely monitor geopolitical events and central bank decisions to understand the pair’s future direction. TECHNICAL ANALYSIS From a technical analysis point of view, the USD/CHF pair’s recovery to 0.9070 may indicate a breakout from its recent consolidation phase. Key resistance levels lie at 0.9100, which, if broken, could indicate further bullish momentum towards 0.9150. On the downside, immediate support is observed near 0.9050, with a stronger floor at 0.9020. The Relative Strength Index (RSI) indicates neutral momentum, suggesting room for further upward movement if buying pressure persists. Additionally, the pair is trading above its 50-day moving average, reinforcing the bullish sentiment in the short term. However, any reversal below key support levels may shift the focus back to the bearish zone. FORECAST The USD/CHF pair has shown signs of recovery, with the potential for further upside if the US Dollar maintains its strength. Positive sentiment surrounding Trump’s tariff plans, coupled with expectations of limited Federal Reserve rate cuts, could support the USD. If the pair sustains momentum above the 0.9070 level, the next resistance at 0.9100 may come into focus, followed by a potential move toward 0.9150. Other bullish catalysts include better US economic data or increased inflation expectations, which may solidify the Federal Reserve’s less dovish position and strengthen the pair. On the other hand, downside risks to the USD/CHF pair still exist because of the safe-haven appeal of the Swiss Franc. Geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas negotiations, could increase demand for the CHF. If the pair fails to hold above the 0.9050 support, it may slide toward 0.9020 or lower, with a breach opening the door to further losses. Moreover, any unexpected dovish shift in US monetary policy or better-than-expected Swiss economic data could add downward pressure to the pair, reversing its recent gains.

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Currencies USD/JPY

Japanese Yen Retreats: Key Factors Behind USD/JPY Stability Above Mid-155.00s

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  • January 21, 2025
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The Japanese Yen has retreated from its one-month high against the US Dollar after a modest recovery for the greenback and as positive equity market sentiment weighs on the safe haven currency. Nonetheless, the Japanese Yen’s downward trend seems somewhat capped as speculative anticipation of an increase in Bank of Japan’s interest rate has gained momentum going into the remainder of the week, with an 80% probability priced by the markets. US President Donald Trump’s tariff comments have rekindled inflationary worries and trade war jitters, further adding to global economic uncertainty. On the technical side, the USD/JPY remains firm above the mid-155.00s, with levels playing both supporting and resisting roles as traders wait for the BoJ’s closely watched policy meeting. This development, coupled with macroeconomic signals and geopolitical dynamics, will determine the near-term path of the currency pair. KEY LOOKOUTS • Markets are eagerly awaiting the announcement by the Bank of Japan for the rate hike that may go a long way in determining the trend of Japanese Yen and other world currencies. • A moderate USD rebound, fueled by trade-related comments and inflation concerns, will be an important driver to watch for in the direction of the USD/JPY pair. • The area of 155.00 is key support, while resistance is seen near 156.25-157.00, and these levels will help guide traders to potential breakouts or reversals in the USD/JPY pair. • The threat of tariffs from US President Donald Trump against Canada and Mexico could reignite trade tensions, which may affect market sentiment and add volatility to global currency markets. The Japanese Yen has pulled back after hitting a one-month high against the US Dollar, with a combination of factors driving the move, including a modest recovery in the Greenback and improved risk sentiment in equity markets. However, speculation of an imminent Bank of Japan (BoJ) rate hike, fueled by hawkish remarks from BoJ officials and rising inflationary pressure, has limited the JPY’s depreciation. Meanwhile, US President Donald Trump’s tariff remarks have revived trade war fears, adding a layer of uncertainty to global markets. Technical analysis suggests resilience in the USD/JPY pair above the 155.00 mark, while traders await the crucial BoJ policy decision and monitor key support and resistance levels to gauge the pair’s next move. The Japanese Yen retreated from a one-month high against the US Dollar as markets anticipate a potential Bank of Japan rate hike. Meanwhile, Trump’s tariff remarks add global trade uncertainty. Technical levels above 155.00 support USD/JPY stability ahead of the BoJ policy meeting. • The Japanese Yen pulled back after reaching a one-month high against the US Dollar amid a modest USD recovery and improved equity market sentiment. • Market places are pricing 80% chance of a hike in Bank of Japan rate amid hawkish comments from officials as also rising inflationary pressure in Japan • US President Donald Trump’s suggestions for placing 25% tariffs on Canada and Mexico sparked renewed fears of a trade war, and added to uncertainty facing global economic and currency markets. • A modest USD rebound from its two-week trough, driven by inflation concerns and trade policy expectations, was also a tailwind for USD/JPY. • The USD/JPY price remains supported close to the 155.00 mark, where resistance levels from 156.25-157.00 levels are influencing trading dynamics in the short term. • Tuesday’s trade lacked any key economic data from both Japan and the US as market focus stayed on central bank meetings as well as geo-political cues. • This is a crucial two-day BoJ policy meeting that is likely to decide the course of action for the Japanese Yen and world market sentiments. The Japanese Yen (JPY) retreated from its one-month high against the US Dollar (USD), primarily due to the combination of several market dynamics such as modest recovery in the Greenback and positive risk appetite in equity markets. However, the downside for the JPY remains limited due to rising expectations of a Bank of Japan (BoJ) rate hike, with markets pricing in an 80% probability. Hawkish comments from BoJ officials and increasing inflationary pressure in Japan have strengthened this narrative. Meanwhile, US President Donald Trump’s announcement of proposed tariffs on Canada and Mexico has reignited trade war fears, adding volatility to global markets and contributing to a cautious trading environment. USD/JPY Daily Price Chart. Source: TradingView, Prepared By ELLYANA On the technical front, the USD/JPY pair has displayed resilience above the 155.00 level, with support and resistance levels guiding market participants. Traders look at a resistance area at 156.25-157.00 for upward momentum. A further decline should bring the pair to the vicinity of the 154.50 support area. With scarce economic reports out this week, all the attention goes to a two-day BoJ policy meeting that will take a big toll on the short-term trend of the JPY. This meeting combined with geopolitical factors and changing US monetary policy expectations will most probably be decisive in determining the USD/JPY pair direction. TECHNICAL ANALYSIS The USD/JPY pair is holding strong around the 155.00 level, which has acted as an important support in a multi-month ascending trend channel. A break below here could take prices lower towards 154.50 intermediate support, possibly to 154.00 and 153.00 psychological support. Conversely, resistance remains around the 156.25 region and last night’s high at 156.60. Break above this latter level might provide a gateway for a run towards 157.00 with the next gain going towards the 157.25-157.30 area and the round figure of 158.00. Traders will look for a decisive breakdown through these levels to confirm the next directional move. FORECAST The USD/JPY currency pair may find a path towards resuming the bullish drive, should it be able to sustain trading above the critical resistance located at 156.25, targeting levels at 156.60 and then reaching the psychological mark of 157.00. Further, breaking out above 157.30 might lead the currency pair towards the 158.00 mark and potentially towards retesting the multi-month high in the 159.00 zone. This rally may be further supported by a stronger

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