USD/CHF climbs to test October highs after FOMC meeting

• FOMC leaves policy unchanged as expected. 
• Market reaction stays limited. 
• CHF drops across the board after statement while USD rebounds after a negative initial reaction.

The USD/CHF pair rose from 1.0005 to 1.0035 after the FOMC decision. While the greenback rose modestly, the Swiss franc pulled back across the board, hitting a fresh low also against the euro. The pair is testing last week highs, if it rises above 1.0037 it would be trading at the strongest since May. 

Fed decision, almost a non-event 

At the end of its two-day meeting, the Federal Reserve decided to keep the Funds rate unchanged at the range 1.00-1.25%. The FOMC statement contained little changes. It mentioned that the balance sheet process initiated in October was proceeding as planned and that the economic activity has been rising at a “solid pace” despite the negative impacts of hurricanes. 

Attention now turns to Thursday’s announcement on who will be the next chair of the Fed. Jerome Powell is expected to be the nominated. Also, the December meeting is on the radar. The CME FedWatch Tool shows the possibility of a rate hike at 97.5%, marginally higher from yesterday’s odds. 

Levels to watch

At the moment of writing, USD/CHF trades at 1.0025, headed toward the highest daily close since May 11. So far it failed to break above October highs located around 1.0035; above resistance levels might be located at 1.0060 and 1.0095/1.0100 (May highs). On the flip side, supports might lie at 1.0025 (European session high), 0.9995 (Oct 31 high) and 0.9965 (Nov 1 low).