CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF breaks out of range, peaks and corrects. 
• It may be forming a Bull Flag pattern with further upside potential.  

USD/CHF pulls back after breaking out of its multi-week range and rallying substantially higher on Friday. 

Since breaking out, the pair is now in a short-term uptrend and given it is a key tenet of technical analysis theory that “the trend is your friend” the odds favor a continuation higher. 

USD/CHF 4-hour Chart 

USD/CHF has pulled back over recent periods and in so doing has formed what looks like a Bull Flag pattern. These are composed of a sharp rally called the “pole” and a pullback (the “flag square”). If this is the case then a break above the 0.8607 high of the flag would lead to a rally to around 0.8619 (Fibonacci 61.8% of the pole extrapolated higher) at a minimum and around 0.8650 (100% extrapolation of the pole) as a maximum. 

A minimum upside target also lies at 0.8617 (August 14 swing low), or 0.8622 (Fibonacci 61.8% extrapolation of the height of the prior range higher). A really bullish move could reach 0.8675, the 100% extrapolation of the height of the range. 

The Relative Strength Index (RSI) moved into overbought territory when the breakout rally peaked. It has since come back down into neutral territory during the pullback in price. This is a bearish sign and suggests a deeper correction may develop. Support lies at 0.8550 (September 12 high) and even tougher support at 0.8540 (the top of the range).   

• USD/CHF breaks out of the range it has been straight-jacketed in for weeks. 
• The pair has probably started a new uptrend with odds now favoring the acquisition of bullish targets. 

USD/CHF decisively breaks out of the top of its multi-week range, probably ending its protracted sideways market trend. A close clearly above 0.8540 and the range ceiling would cement bullish expectations.  

The move means the pair has probably changed its short-term trend from range-bound to bullish, and since it is a fundamental principle of technical analysis that “the trend is your friend” the odds favor a continuation higher.

USD/CHF 4-hour Chart 

USD/CHF is now likely to reach an upside target at a minimum of 0.8617 (August 14 swing low), or 0.8622 (Fibonacci 61.8% extrapolation of the height of the range higher). A really bullish move could reach 0.8675, the 100% extrapolation of the height of the range.

• USD/CHF consolidates in a range below the 50-day SMA as traders await the US NFP report.
• A modest USD pullback from a one-month high is seen as a key factor capping the major.
• Reduced bets for a 50 bps Fed rate cut in November lend support to the USD and the pair.

The USD/CHF pair reverses an intraday dip to the 0.8500 psychological mark and climbs back closer to a three-week top during the first half of the European session on Friday. Spot prices, however, remain below the 50-day Simple Moving Average (SMA), warranting some caution for bullish traders ahead of the release of the US monthly employment details.

The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the economy added 140K jobs in September, slightly lower than the 142K in the previous month, and the Unemployment Rate held steady at 4.2%. Apart from this, Average Hourly Earnings might provide cues about the size of the Federal Reserve's (Fed) rate cut in November. This, in turn, will play a key role in driving the US Dollar (USD) demand and determining the next leg of a directional move for the USD/CHF pair. 

Ahead of the key data, some repositioning trade drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, away from a one-month high touched on Thursday. This, in turn, acts as a headwind for spot prices amid a further escalation of geopolitical tensions in the Middle East. That said, reduced bets for an oversized rate cut by the Federal Reserve (Fed) in November limit the USD losses and support prospects for a further appreciating move for the USD/CHF pair.

Nevertheless, spot prices seem poised to register strong weekly gains, though remain confined in a multi-week-old trading range. This makes it prudent to wait for sustained strength and acceptance above the 50-day SMA hurdle, around the 0.8540 region, before positioning for an extension of this week's goodish rebound from sub-0.8400 levels, or the lower end of the short-term range.

• USD/CHF halts its winning streak as safe-haven Swiss Franc receives support from rising Middle-East tensions.
• The CHF faced challenges as softer inflation data bolstered expectations of SNB’s 50 basis point rate cut in December.
• The US Dollar receives downward pressure as US Treasury yields lose ground.

USD/CHF breaks its four-day winning streak, trading around 0.8510 during Friday’s Asian session. The Swiss Franc (CHF) receives support from the safe-haven flows amid rising Middle-East tensions. US President Joe Biden mentioned that the United States is in talks with Israel regarding potential strikes on Iran's Oil infrastructure.

Moreover, Israeli Prime Minister Benjamin Netanyahu warned that Iran "will pay a heavy price" for Tuesday’s attack, which reportedly involved the launch of at least 180 ballistic missiles at Israel, according to the BBC.

The Swiss Franc (CHF) faced downward pressure following Thursday's weaker-than-expected inflation data, which has raised the likelihood of dovish policymakers advocating for a 50 basis point rate cut by the Swiss National Bank (SNB) in December. Previously, the SNB had already lowered the key interest rate by 25 basis points for the third consecutive time.

Switzerland's Consumer Price Index rose 0.8% year-over-year in September, down from both market expectations and August's figure of 1.1%. This is the lowest inflation rate since September 2021. Additionally, the monthly inflation rate dropped by 0.3%, exceeding forecasts of a 0.1% decline, after remaining flat in August.

The US Dollar (USD) breaks its winning streak amid subdued US Treasury yields. The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, trades around 101.90 with 2-year and 10-year yields on US Treasury bonds standing at 3.70% and 3.845, respectively, at the time of writing.

Federal Reserve Bank of Chicago President Austan Goolsbee reiterated on Thursday that the interest rates need to come down over the next year by “a lot.” Goolsbee further stated that he’d like to keep the unemployment rate at 4.2% from rising any further.

• USD/CHF consolidates between 0.8400-0.8550, with bullish momentum suggesting potential for higher prices.
• Buyers need to clear the 50-DMA at 0.8537 and the September 12 peak of 0.8550 to target 0.8600 and 0.8748.
• A downside break below 0.8500 could see a retreat toward 0.8400, where buyers may look for a bounce back to 50-DMA levels.

The USD/CHF posted solid gains of over 0.30% on Thursday as the Greenback recovers some ground, aimed to finish the week with solid gains. As the Friday’s Asian session begins, the pair trades at 0.8522, virtually unchanged.

USD/CHF Price Forecast: Technical outlook

The USD/CHF is neutral to upward biased, after consolidating within the 0.8400-0.8550 area during September and the first four days of October.

Momentum favors buyers as the Relative Strength Index (RSI) turned bullish, hinting that higher prifces lie ahead.

However, USD/CHF buyers need to clear the 50-day moving average (DMA) at 0.8537. If surpassed, the immediate ceiling level to be broken will be the September 12 peak at 0.8550. A breach of the latter will expose the 0.8600 figure, followed by the next cycle high seen at 0.8748. the August 15 high.

On the other hand, if sellers drag prices below 0.8500, the pair could aim toward 0.8400, looking for a bounce, that could push prices to the 50-DMA.

USD/CHF Price Action – Daily Chart

• USD/CHF gains ground as recent labor data decreased the chances of an aggressive rate cut by the Fed in November.
• CME FedWatch Tool suggests 31.4% odds of a 50 basis point Fed rate cut, down from 49.3% a week ago.
• Swiss CPI slowed to 0.8% YoY in September, down from both expected and August's reading of 1.1%.

USD/CHF continues its winning streak for the fourth successive session, trading around 0.8510 during the European hours on Thursday. This upside of the USD/CHF pair could be attributed to recent strong US labor data, which decreased the likelihood of the Federal Reserve (Fed) delivering another aggressive rate cut in November.

The ADP US Employment Change reported an increase of 143,000 jobs in September, exceeding the anticipated 120,000 jobs. Furthermore, annual pay increased by 4.7% year-over-year. The total number of jobs added in August was revised upward from 99,000 to 103,000. This report indicates that the labor market is in better condition than previously perceived at the start of the third quarter.

The CME FedWatch Tool indicates that markets are assigning a 65.9% probability to a 25 basis point rate cut by the Federal Reserve in November, while the likelihood of a 50 basis point cut is 31.4%, down from 49.3% a week ago.

The Swiss Franc (CHF) might have received downward pressure following weaker-than-expected inflation data released on Thursday. Switzerland's Consumer Price Index slowed to 0.8% year-over-year in September, down from both market expectations and August's figure of 1.1%. This is the lowest inflation rate since September 2021. Additionally, the monthly inflation rate dropped by 0.3%, exceeding forecasts of a 0.1% decline, after remaining flat in August.

The downside of the Swiss Franc (CHF) could be restrained due to safe-haven flows amid escalating Middle-East tensions. The Israeli Broadcasting Authority (IBA) reported that Israel's security cabinet has resolved to take decisive action in response to the recent Iranian attack. On Tuesday night, Iran launched more than 200 ballistic missiles and drone strikes targeting Israel.

• USD/CHF is rising within a range-bound market. 
• It has almost reached its target close to the top of the range high. 

USD/CHF extends its gains as it unfolds an up leg within a range-bound market. 

The move is underway and likely to reach the 0.8517 resistance level formed by multiple recent highs. A really bullish move could even see the pair reach the 0.8539 ceiling of the range.

USD/CHF 4-hour Chart 

USD/CHF is in a sideways trend. Given the principle in technical analysis that “the trend is your friend” the odds favor an extension of this trend. Once the pair reaches its upside target it will probably roll over and begin a down leg towards the range lows. 

Only a decisive break above 0.8539 and the top of the range would signal a change in trend. A decisive break would be one accompanied by a long green candle breaking above the top of the range and closing near its high, or three green candles in a row that broke above the level. If successful, such a move would probably then rally to a minimum target of 0.8617 (August 14 swing low). 

• USD/CHF trades on a softer note near 0.8460 in Wednesday’s Asian session. 
• Lower expectations of a deeper Fed rate cut might cap the pair’s downside.
• The rising geopolitical risks could lift the Swiss Franc. 

The USD/CHF pair trades with mild losses around 0.8460 during the early European session on Wednesday. The escalating geopolitical tensions in the Middle East boost the safe-haven currency like the Swiss Franc (CHF). Traders will take more cues from the US ADP Employment Change data for September later on Wednesday. 

Reduced bets for a 50 basis points (bps) Federal Reserve (Fed) rate cut in November could support the USD against the CHF. Fed Chair Jerome Powell noted on Monday that the US central bank intends to do what it takes to keep the economy "in solid shape," but it is not in a hurry and will lower its benchmark rate ‘over time.’ 

The US employment report on Friday will be in the spotlight. If the jobs report showed a worse-than-expected outcome, this could prompt the central bank to consider cutting rates deeper, which might exert some selling pressure on the USD.

Iran has launched hundreds of missiles toward Israel, and Prime Minister Benjamin Netanyahu vows to retaliate against Iran for a missile attack on Tuesday. US President Joe Biden reaffirmed US support for Israel after the missile attack, describing it as "defeated and ineffective." Increasing geopolitical tensions send investors into safe-haven assets like the CHF and create a headwind for USD/CHF.

• USD/CHF is rising within a range-bound market. 
• It has encountered resistance at a cluster of MAs but will probably continue higher.

USD/CHF is rising up within its sideways range. It has reached a cluster of major Moving Averages which are providing firm resistance. 

USD/CHF 4-hour Chart 

The trend is neither up nor down but rather sideways and so the oscillating character of the market is likely to extend, given the principle that “the trend is your friend.”

The blue Moving Average Convergence Divergence (MACD) momentum indicator line recently crossed above the red signal line, providing a buy signal. MACD is a more reliable indicator within sideways markets. 

USD/CHF will probably continue higher. A break above the 0.8480 high would lead to an extension up to a target at about 0.8517 (September 23 and 26 highs) followed by the roof of the range at 0.8539.

• USD/CHF advances due to the waning likelihood of more bumper Fed rate cuts.
• CME FedWatch Tool indicates a 38.2% probability of a 50 basis point rate hike, down from 53.3% the previous day.
• Swiss Real Retail Sales increased by 3.2% YoY, marking the strongest growth since February 2022.

USD/CHF extends its gains for the second successive day, trading around 0.8470 during the early European hours on Tuesday. This upside of the USD/CHF pair is attributed to the latest speech from the Federal Reserve (Fed) Chairman Jerome Powell.

Fed Chair Powell said the central bank is not in a hurry and will lower its benchmark rate ‘over time.’ Fed Chair Powell added that the recent 50 basis point interest rate cut should not be seen as an indication of similarly aggressive future actions, noting that upcoming rate changes are likely to be more modest.

The CME FedWatch Tool indicates that markets are assigning a 61.8% probability to a 25 basis point rate cut by the Federal Reserve in November, while the likelihood of a 50 basis point is 38.2%, down from 53.3% a day ago.

Switzerland's economic indicators have been showing positive momentum recently. In August, Real Retail Sales rose by 3.2% year-on-year, surpassing the expected 2.6% increase. This is the strongest growth since February 2022 and reflects an upwardly revised gain of 2.9% in July. The boost in retail sales highlights increasing consumer spending, which is a vital driver for the economy.

On Monday, the KOF Leading Indicator for September also pointed to a brighter economic outlook, with a reading of 105.5, up from 105.0 in August. This exceeded market expectations of 102.0, signaling a continuation of the recovery seen in recent months. The steady improvement in this indicator, suggests that Switzerland's economy is on a positive trajectory, supported by both consumer activity and broader economic factors.

In September, the Swiss National Bank (SNB) reduced its key interest rate by 25 basis points (bps) for the third consecutive time. The move came as part of the SNB's ongoing efforts to maintain price stability and mitigate the impact of the strong Swiss Franc (CHF), which has posed challenges for exporters.

The SNB also signaled its readiness to further cut interest rates if needed, indicating a proactive approach to ensuring that the economy remains on track. By keeping borrowing costs lower, the SNB aims to encourage spending and investment, while also managing the exchange rate to protect the competitiveness of Swiss goods and services.

• USD/CHF might be starting a new up leg within its sideways market range. 
• MACD is starting to bend and if it crosses its signal line bulls may pile in. 

USD/CHF has fallen to the 0.8400 floor of the range and rebounded. It is too early to decide whether this is the start of a new up leg within the range but given the established sideways trend the odds favor such a move developing and the range extending. 

USD/CHF 4-hour Chart 

The Moving Average Convergence Divergence (MACD) momentum indicator is below the zero line and turning. If the blue MACD crosses above the red signal line it will provide a stronger signal that a new up leg within the range-bound consolidation is forming. MACD is a more reliable indicator within sideways compared to strongly trending markets. 

If the MACD line crosses above its signal line and price continues to rise it will probably continue all the way up to an initial target at about 0.8517 (September 23 and 26 highs) followed by the roof of the range at 0.8539. 

There is a possibility the pair could breakout of the range and given the prior trend to its formation was bearish, a downside break is mildly favored. A close below 0.8375 (September 6 low) would signal such a breakout. A decisive break would be one accompanied by a longer-than-average red candlestick that closed near its low or three consecutive bearish candles that broke below the level. Such a move would be expected to go as low as 0.8318, the 61.8% Fibonacci extrapolation of the height of the range extrapolated lower.  

• USD/CHF holds positive ground near 0.8415 in Monday’s early European session. 
• Rising bets of further jumbo Fed rate cuts and the ongoing geopolitical tensions in the Middle East might weigh on the pair. 
• Traders brace for the Fed’s Chair Jerome Powell's speech on Monday. 

The USD/CHF pair recovers to around 0.8415, snapping the two-day losing streak during the early European session on Monday. However, the upside of the pair might be limited amid the bets of more big rate cuts from the US Federal Reserve (Fed). Traders will take more cues from the Fed Chair Jerome Powell and Governor Michelle Bowman later on Monday. 

Slowing Personal Consumption Expenditures (PCE) Price Index inflation data in August has prompted traders to bet the Fed to continue a fast pace of rate cuts as price pressures ease toward its 2% target. This, in turn, is likely to undermine the US Dollar (USD) in the near term. The CME FedWatch Tool showed that markets are pricing in nearly a 54% chance of a half-point cut in November, while the likelihood of a quarter-point cut stands at 46%.

Meanwhile, Israel expanded its attacks on Hezbollah in Lebanon and the Houthis in Yemen, raising fears of a regional war, as Hezbollah said it will continue to fight even as it faces growing losses in its senior ranks. Traders will closely watch the development surrounding geopolitical risks. Any signs of escalating tensions in the Middle East could boost the demand for safe-haven flows, benefitting the Swiss Franc (CHF). 

The Swiss National Bank (SNB) decided to lower its borrowing costs last week, bringing its key interest rate down by 25 bps to 1.0%. “I expect another two 25bp moves in December and March at the very least, primarily because I don’t see any near-term sources of depreciation for the franc without a stronger stance on intervention from the SNB. We are heading back towards zero relatively quickly,” said Adrian Prettejohn, Europe economist at Capital Economics. 

The Swiss National Bank’s third interest rate cut did not push USD/CHF out of its month-long range between 0.84 and 0.8550, DBS’ FX analyst Philip Wee notes.

SNB does not want EUR/CHF to find new lows

“SNB lowered the policy rate by 25 bps to 1.00% and kept the door open for more easing in the coming quarters on its new forecast for inflation to decelerate to 0.6% in 2025 from 1.2% in 2024.”

“In June, SNB projected a modest slowdown in inflation to 1.1% from 1.3% based on its assumption of a stable 1.25% policy rate over the forecast horizon.” 

“SNB signalled its readiness to intervene in currency markets, reinforcing its concerns about the CHF’s strength as a source of significant disinflation and pressure for Swiss industries amid weak demand from Europe. SNB likely does not want EUR/CHF to post a new year’s low below 0.93.” 

• USD/CHF is trading lower within a range formed since August. 
• It is in a sideways trend and a decisive breakout would be required to give directionality.
   

USD/CHF continues trading up and down within a range. It is probably in a sideways trend, which given the principle that “the trend is your friend” is likely to endure.

USD/CHF 4-hour Chart 

USD/CHF is currently moving down within the range and it will probably reach at least as far as the 0.8415, the September 25 lows. A particularly bearish move might even fall to the 0.8400 floor. After that it will probably recover and continue the sideways trend. 

The Moving Average Convergence Divergence (MACD) momentum indicator is below the signal and the zero lines indicating bearishness. 

A decisive break out of the range – either higher or lower – would change the range-bound consolidation mode.  The top of the range lies at 0.8550 (September 12 high); the bottom at 0.8375 (September 6 low). A decisive break would be one accompanied by a longer-than-average candlestick that closed near its high in the case of a bullish break and low in a bearish case. That, or three consecutive bullish or bearish candles that broke either above or below the levels. 

Given the trend prior to the range was bearish the odds margin ally favor a downside breakout. Such a move would be expected to go as low as 0.8318, the 61.8% Fibonacci extrapolation of the height of the range extrapolated lower. 

• USD/CHF holds positive ground near 0.8485 in Friday’s early European session, up 0.32% on the day. 
• The SNB cut the interest rates by 25 bps, bringing its policy rate to 1.00% at its September meeting on Thursday. 
• Fed’s Cook said she 'wholeheartedly' backed rate cut. 

The USD/CHF pair attracts some buyers to around 0.8485 on Friday during the early European session. The Swiss Franc (CHF) weakens after the Swiss National Bank (SNB) reduced interest rates on Thursday. All eyes will be on the release of US Personal Consumption Expenditures (PCE) Price Index data, which is due later on Friday.

The Swiss central bank decided to cut the interest rates by 25 basis points (bps), bringing its policy rate to 1.00%, the lowest level since early 2023. Goldman Sachs analysts noted the SNB cut on Thursday was supported by lower inflationary pressure, driven by a stronger CHF and other factors, and they expect a further 25 bps reduction at the December meeting, citing its dovish guidance and new inflation projections.

The better-than-estimated US economic data on Thursday have provided some support to the US Dollar (USD) against the CHF. The US weekly Initial Jobless Claims for the week ending September 21 rose to 218K, up from the previous week's 222K (revised from 219K). The figure came in below the initial consensus of 225K. Meanwhile, US Durable Goods Orders were flat in August, compared to a rise of 9.9% in July, stronger than the expectation of a decline of 2.6%.

Nonetheless, the dovish remarks from the Federal Reserve (Fed) officials and rising bets of Fed rate reduction in the coming months could cap the upside for the USD. Fed Governor Lisa Cook stated on Thursday that she "wholeheartedly" supported the central bank's decision to cut interest rates by 50 bps, calling it an important step in maintaining the path to "moderate" economic growth.

• USD/CHF falls sharply from 0.8500 as the SNB reduces its key borrowing rates by 25 bps for the consecutively third meeting.
• The SNB was expected to cut interest rates due to low inflation environment.
• Investors await the US PCE inflation for fresh Fed interest rate guidance.

The USD/CHF pair drops sharply from the psychological resistance of 0.8500 in Thursday’s European session. The Swiss Franc asset faces selling pressure as the Swiss National Bank (SNB) cuts interest rates by 25 basis points (bps) to 1%. This is the third straight SNB's 25 bps interest rate cut.

The SNB was widely anticipated to reduce its key borrowing rates further as inflationary pressures in the Swiss economy have settled more than the bank’s target of 2%. The Swiss annual Consumer Price Index (CPI) has decelerated to 1.1% in August.

Meanwhile, the US Dollar (USD) clings to Thursday’s recovery move as Federal Reserve (Fed) policymakers, including Chair Jerome Powell, line up to comment on the economy and the interest rate outlook. The comments from Fed policymakers will indicate whether the central bank will deliver a second consecutive larger-than-usual 50 bps interest rate cut in November or will slow down the policy-easing cycle by reducing interest rates with a gradual rate of 25 bps.

In the monetary policy meeting last week, the Fed started the rate-cut cycle with a 50-bps decline in interest rates as policymakers were concerned about the deteriorating job growth pace.

The CME FedWatch tool shows that the possibility of the Fed reducing interest rates by 50 bps to 4.25%-4.50% in November has increased to 61% from 39% a week ago.

On the economic front, investors await the United States (US) Personal Consumption Expenditure Price Index (PCE) data for August, which will be published on Friday. Annual core PCE inflation, a Fed’s preferred inflation measure, is estimated to have grown at a faster pace of 2.7% against the July print of 2.6%.

• USD/CHF may gain ground as the SNB is widely expected to deliver a 25 basis point rate cut on Thursday.
• Market participants estimate a 63% chance of a quarter-percentage-point cut by the SNB.
• CME FedWatch Tool suggests around a 50% chance of totaling 75 basis points rate cuts by the Fed in 2024.

USD/CHF hovers around 0.8500 during the Asian session on Thursday, maintaining its position following recent gains from Wednesday. The Swiss Franc (CHF) may receive downward pressure ahead of the Swiss National Bank’s (SNB) interest rate decision scheduled later in the day.

The Swiss National Bank is widely expected to deliver a 25 basis point interest rate cut at its upcoming September meeting. Interest Rate Probabilities suggest that market participants estimate a 63% chance of a quarter-percentage-point cut by the SNB, while for a larger one, the chances are at 37%.

On Wednesday, the ZEW Swiss Survey Expectations fell by 5.4 points from the previous month, registering a reading of -8.8 in September, down from a previous reading of -3.4. UBS, which partners with the CFA Society Switzerland to publish the indicator, noted that the negative reading indicates increasing pessimism among participants about the growth outlook for the Swiss economy over the next six months.

The upside of the USD/CHF pair could be limited due to the subdued US Dollar (USD). The Greenback receives downward pressure from rising odds of further interest rate cuts by the US Federal Reserve (Fed) in upcoming policy meetings. According to the CME FedWatch Tool, markets are pricing in around a 50% chance of totaling 75 basis points to be deducted by the Fed to a range of 4.0-4.25% by the end of this year.

Federal Reserve Governor Adriana Kugler said on Wednesday that she “strongly supported” the Fed’s decision to cut the interest rates by a half point last week. Kugler further stated that it will be appropriate to make additional rate cuts if inflation continues to ease as expected, per Bloomberg.

Traders will likely observe the release of the final US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) scheduled to be released later in the North American session.

• USD/CHF rises over 0.84%, nearing the weekly high of 0.8500 amid strong US Dollar momentum.
• Markets estimate a 63% chance of a 25 bps rate cut by the Swiss National Bank at Thursday’s meeting.
• Falling SNB currency reserves signal intervention efforts to weaken the Franc ahead of leadership changes.

The USD/CHF edges higher during the North American session, registering gains of over 0.84% as traders brace for the Swiss National Bank (SNB) monetary policy decision. This and a strong US Dollar, kept the major at around the highs of the week at around 0.8500.

Traders brace for a possible 25 bps SNB rate cut, as the Swiss Franc weakens on intervention rumors and falling currency reserves

Data-wise, the Swiss and US economic dockets remained scarce, as US housing data showed a deterioration in the sector, though a strong recovery of the US Dollar offset it.

Meanwhile, the Swiss National Bank (SNB) is expected to lower rates by 25 basis points to 1.25% on Thursday. Interest Rate Probabilities suggest that market players estimate a 63% chance of a quarter-percentage-point cut by the SNB, while for a larger one, the chances are at 37%.

According to FX Street Analyst Joaquin Monfort: “Complaints from Swiss exporters who claim the strength of CHF is making them uncompetitive have put pressure on the SNB to directly intervene in FX markets to weaken the CHF.”

“Last week data revealed that the SNB’s Foreign Currency Reserves fell to CHF 694 billion in August, down from CHF 704 billion in July. This marks the fourth consecutive decline, suggesting the SNB continues selling the Franc to dampen its value,” Monfort added.

Worth noting that this meeting would be the last for SNB Chairman Jordan, which will be replaced by the Vice-Chair Schlegel

• USD/CHF surges to near 0.8500 amid a sharp decline in the Swiss Franc as traders brace for SNB’s policy decision.
• The SNB is expected to cut interest rates by 25 bps for the third time in a row.
• Investors expect the Fed to reduce its key borrowing rates further by 75 bps this year.

The USD/CHF pair gains sharply to near 0.8485 in Wednesday’s European session. The Swiss Franc asset strengthens as the Swiss Franc (CHF) performs weakly ahead of the Swiss National Bank’s (SNB) interest rate decision, which will be announced on Thursday.

Economists expect the SNB to ease interest rates further as the annual Consumer Price Index (CPI) in the Swiss economy has decelerated to 1.1% in August. The SNB is expected to cut interest rates by 25 basis points (bps) to 1%. This would be the third straight interest rate cut by the SNB.

Meanwhile, the US Dollar (USD) holds ground near the yearly low even though market participants expect that the Federal Reserve (Fed) will deliver one more larger-than-usual interest rate cut of 50 basis points (bps) in any of the two policy meetings remaining this year. The CME FedWatch tool shows that the Fed could cut interest rates further by 75 bps, a total in November and December meetings.

This week, investors will keenly for the United States (US) core Personal Consumption Expenditure price index (PCE) data for August as it will provide fresh cues on the interest rate outlook, which will be published on Friday.

USD/CHF oscillates in a tight range of 0.8370-0.8550 for almost a month. The asset struggles for direction amid an inventory adjustment process, a phase in which positions are transferred between retail participants and institutional investors.

The asset remains sticky to the 20-period Exponential Moving Average (EMA) near 0.8465, suggesting a sideways trend.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating indecisiveness among market participants.

A recovery move above the monthly high near 0.8550 will drive the asset toward the round-level resistance of 0.8600, followed by an August 20 high of 0.8632.

On the flip side, more downside would appear if the asset breaks below the round-level support of 0.8400, which would drag the major towards the 28 December 2023 low of 0.8333 and round-level support of 0.8300.

USD/CHF four-hour chart