CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF oscillates near a six-month high around 0.9150, exhibiting strength ahead of crucial US data.
• The SNB is expected to extend the rate-cut cycle in June.
• The Fed sees the current interest rate policy framework as appropriate.

The USD/CHF pair hovers around the six-month high of 0.9150 in Wednesday’s early American session. The near-term outlook of the Swiss Franc asset remains bullish, with expectations of further escalation in policy divergence between the Federal Reserve (Fed) and the Swiss National Bank (SNB).

The Fed is expected to keep interest rates at their current levels for a longer period, given the strength in the United States labor market and stubbornly higher inflation due to strong consumer spending.

The SNB will reduce interest rates again in the June policy meeting. The SNB kicked off the global rate-cut cycle after lowering borrowing rates by 25 basis points (bps) to 1.5% in the March meeting. The inflation in the Swiss economy has softened below the 2% target from a longer period, allowing the SNB to slice key interest rates further.

Meanwhile, investors await the crucial US Q1 Gross Domestic Product (GDP) and the core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published on Thursday and Friday. The economic data will impact market expectations for Fed rate cuts, which are currently expected in the September meeting.

USD/CHF trades back-and-forth in a tight range near the crucial resistance of 0.9110, which is plotted from 1 November 2023 high plotted on a daily timeframe. The asset is expected to extend its upside as the upward-sloping 20-day Exponential Moving Average (EMA) near 0.9075 suggests an upbeat near-term outlook.

The 14-period Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, indicating that a bullish momentum is still active.

Going forward, an upside move above intraday high of 0.9153 will drive the asset towards the round-level support of 0.9200. A breach of the latter will push the asset further to 4 October 2023 high at 0.9232.

In an alternate scenario, fresh downside would appear if the asset breaks below the psychological support of 0.9000, which will expose it to March 22 low at 0.8966, followed by March 1 high at 0.8893.

USD/CHF daily chart

• USD/CHF remains bullish due to disparities in expected policy trajectories between the Fed and SNB.
• The Swiss Franc is under downward pressure as the SNB is anticipated to implement another rate cut in June.
• The US Dollar has rebounded, potentially driven by the higher 10-year yield on US Treasury bond.

USD/CHF hovers near 0.9140 during early European trading hours on Wednesday, maintaining its position close to the six-month high of 0.9152 reached on April 15. The Swiss Franc (CHF) faces challenges due to the notable disparities in expected monetary policy trajectories between the US Federal Reserve (Fed) and the Swiss National Bank (SNB).

Swiss annual inflation dropped to a more than two-year low of 1% in March, emphasizing the SNB's assertion that underlying inflation has moderated. This, coupled with pessimistic Business Confidence indicators and a decline in Retail Sales, has strengthened market expectations that the SNB may implement another rate cut in June.

The CHF had already experienced significant depreciation after the Swiss National Bank unexpectedly reduced its main interest rate by 25 basis points to 1.50% in March, becoming the first major central bank to reverse course on tighter monetary policy.

In the United States (US), the probability of the Federal Reserve's maintaining interest rates unchanged in the June meeting has risen to 84.6%, up from the previous week's 82.7%, according to the CME FedWatch Tool.

The US Dollar Index (DXY), which measures the US Dollar (USD) against six major currencies, has rebounded due to a higher 10-year yield on US Treasury bonds, standing at 4.62%, up by 0.54% at the time of writing. However, disappointing US Purchasing Managers Index (PMI) data is weighing on the Greenback, thereby limiting the advance of the USD/CHF pair.

In April, the preliminary S&P Global Composite PMI for the US declined to 50.9 from the previous reading of 52.1. Additionally, the Manufacturing PMI fell to 49.9 from 51.9 in the previous reading, below the estimated 52.0. Similarly, the Services PMI decreased to 50.9, compared to the prior 51.7, falling short of the expected 52.0.

• USD/CHF faces pressure above 0.9100 as US Dollar drops after weak S&P Global PMI data for April.
• The preliminary Manufacturing PMI falls below the 50.0 threshold.
• The Fed advocates for keeping interest rates at their current levels longer.

The USD/CHF pair faces a sell-off above the round-level support of 0.9100 in Tuesday’s early American session. The Swiss Franc asset falls as the US Dollar Index (DXY) drops to 105.80 after the S&P Global reported weak preliminary PMI data for April.

The agency reported that both Manufacturing and Services PMI missed expectations. The Manufacturing PMI slips below the 50.0 threshold that separates expansion from contraction. The factory data lands at 49.9 lower than the expectations of 52.0 and the prior reading of 51.9. The Services PMI drops to 50.9 from the consensus of 52.0 and the former reading of 51.7.

Going forward, investors will shift focus to the United States core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published on Friday.

The core PCE Price Index data is the Federal Reserve’s (Fed) preferred inflation measure. It is estimated to have grown steadily by 0.3% on a month-on-month basis, with annual inflation softening to 2.6% from 2.8% recorded in February. This will influence market expectations of Fed rate cuts, which are currently anticipated in the September meeting.

10-year US Treasury yields rise further to 4.64% as the Fed continues to argue that the current monetary policy framework is appropriate as stubbornly higher inflation in the first quarter of this year cannot be ignored.

The formation of the USD/CHF pair on a four-hour timeframe appears to be a Rising Wedge chart pattern, which indicates a limited upside and is generally followed by a breakdown move. The 20-period Exponential Moving Average (EMA) at 0.9100 glued with the Swiss Franc asset, suggesting indecisiveness among market participants.

The 14-period Relative Strength Index (RSI) shifts to the 40.00-60.00 range, indicating a consolidation ahead.

Fresh downside would appear if the asset breaks below the psychological support of 0.9000, which will expose it to March 22 low at 0.8966, followed by March 1 high at 0.8893.

In an alternate scenario, an upside move above April high of 0.9150 will drive the asset towards the round-level support of 0.9200. A breach of the latter will push the asset further to 4 October 2023 high at 0.9232.

USD/CHF four-hour chart

• USD/CHF gains ground near 0.9125 on the risk-on mood in Tuesday’s early European session. 
• The hawkish comments from the Fed lift the Greenback and create a tailwind for USD/CHF. 
• The ongoing geopolitical tensions in the Middle East might boost safe-haven assets like the Swiss Franc. 

The USD/CHF pair trades on a stronger note for the second consecutive day around 0.9125 during the early European session on Tuesday. The risk-on environment amid easing fears of wider tensions in the Middle East provides some support to the US Dollar (USD). Investors await the US preliminary S&P Global Purchasing Managers Index (PMI) data for April on Tuesday for fresh impetus. 

The Fed Bank of Chicago revealed on Monday that the National Activity Index improved to 0.15 in March from 0.09 in the previous reading. However, the data had little to no impact on the Greenback after the release. The hawkish remarks from US Federal Reserve (Fed) policymakers triggered the expectation that the US central bank would delay the rate cut, which boosts the USD against the Swiss Franc (CHF). 

The US preliminary Gross Domestic Product Annualized for the first quarter (Q1) and March’s Personal Consumption Expenditures Price Index (PCE) later this week will be closely watched events and might offer some hints about the possibility of policy easing by the Fed. In case the reports show upbeat data, this could boost the USD and cap the pair’s upside.

On the other hand, the ongoing geopolitical tensions in the Middle East might boost safe-haven flows, benefiting the CHF. Apart from this, the Swiss ZEW Survey for April will be released on Wednesday. On Friday, Swiss National Bank (SNB) Chairman Jordan's speech will be in the spotlight. 

The US Dollar consolidates near highs with bears contained at 0.9075.

Easing geopolitical fears and monetary policy divergence are weighing on the Swiassie.

USD/CHF: Support at 0.9075 is closing the path towards the key 0.8980 - 0.9000 area.

The US Dollar regained lost ground on Friday, following a risk-averse reaction to Israel’s drone attack on Iran, and the pair has remained consolidating on Monday, with bears contained above 0.9075.

A moderate risk appetite, amid ebbing geopolitical fears, and lower US Treasury yields have weighed on demand for the USD. The US Dollar Index, which measures the price of the Dollar against a basket of the six most traded currencies has remained practically flat in the absence of key fundamental data.

Risks that the Middle East conflict might escalate into a regional war, involving Iran, have faded, at least for now, and that is likely to keep demand for the safe-haven Swiss Franc subdued.

In the US, investors have already priced in that the Fed will delay the monetary easing kick-off, and, most probably also reduce its size, and are looking for further clues about the Fed's policy plans. In this sense, Thursday’s US Q1 Gross Domestic Product and Friday’s PCE Prices Index will be analysed with particular interest.

USD/CHF Price Analysis: Technical outlook

Technical indicators show the bullish trend still active, with no clear sign of a trend shift in sight apart from some bearish divergence in the 4 H RSI. Immediate support at 0.9075 is closing the path towards the key 0.8980 - 0.9000 area, where the late-march lows and trendline support meet.

On the upside, a break of 0.9143 would resume the bullish trend and pave the path for a retest of November’s high, at 0.9240.

USD/CHF Daily Chart

• USD/CHF has risen over 8.0% since the start of 2024. 
• It has broken above some very important levels. 
• The question now is, has USD/CHF changed trend? 

USD/CHF was in a long-term downtrend until the pair found a floor at the end of 2023. 

Since then USD/CHF has made steady progress higher, gaining over 8.0% in the first three months of 2024. 

An interesting question now is whether from a technical point of view, the long-term trend has changed from bearish to bullish? 

This is important because, as the old adage goes “the trend is your friend until the bend at the end.”

In short, has USD/CHF met its “bend” and made enough progress to reverse its downtrend?

USD/CHF Weekly Chart

In February USD/CHF rose above the last major lower high of the prior downtrend which formed in December 2023, at 0.8821. Technical analysts consider this as a key level. If price breaks above it, it increases the chances the asset has undergone a trend reversal. 

In March USD/CHF broke above the red 50-week Simple Moving Average (SMA) – another sign the long-term downtrend might be ending. At the same time it breached a long-term down trendline, providing yet more evidence of a reversal. 

During its rise USD/CHF has formed two sets of peaks and troughs (two “higher highs” and two “higher lows”). This further suggests a heightened probability the pair might be reversing trend. If it had only formed one peak and trough it might still be said to be correcting rather than reversing. This is because it could still be a common ABC three-wave correction. Because it has formed two, however, this cannot now be the case. 

Momentum has been reasonably solid during the move higher, though not quite as strong as the bearish momentum on the corresponding way down – this unfortunately is evidence the move may yet still be only a pullback within a broader downtrend. The difference in momentum is mild, however, reducing the risk that is the case. 

USD/CHF has now reached a formidable band of resistance from the 100-week and 200-week SMAs coiling just above the current highs in the 0.9100s. These remain a tough obstacle for bears to overcome. 

To really seal the deal on a reversal of the long-term downtrend in USD/CHF arguably must decisively break above the two major MAs currently bearing down on price. 

A decisive break is one characterized by the formation of a long green bullish candle that pierces through the MAs and closes near its high or three consecutive bullish candles that breach the level. 

Another key level is the October 2023 high at 0.9244 and this should arguably also be breached for there to be enough evidence to support the view USD/CHF had entered an uptrend. 

Last week USD/CHF also formed a bearish Hanging Man Japanese candlestick pattern which if followed by a bearish candle this week would signal a potential short-term reversal lower. This would keep bearish hopes alive and delay further the moment when it could be said with any degree of confidence that USD/CHF was in a long-term uptrend.

• USD/CHF holds positive ground near 0.9115 in Monday’s early Asian session. 
• Many Fed officials prefer to wait longer than previously anticipated to cut rates amid the elevated inflation, lifting the Greenback. 
• SNB Chairman Thomas Jordan said monetary policy should remain focused on price stability. 

The USD/CHF pair trades on a positive note on Monday during the early European session. The uptick of the pair is supported by the lower bets on rate cut expectations from the Federal Reserve (Fed), with traders seeing just one or two rate cuts happening this year. The preliminary US Gross Domestic Product Annualized for the first quarter (Q1) and the Personal Consumption Expenditures (PCE) Price Index will be the highlights for this week.

With a robust US economy and stickier-than-expected inflation, investors dial back interest rate cut expectations. Several Fed officials prefer to wait longer than previously expected to cut rates following a series of surprisingly high inflation readings. The high-for-longer US rate narrative lifts the Greenback and acts as a tailwind for the USD/CHF pair. 

On Friday, Chicago Federal Reserve (Fed) President Austan Goolsbee hinted at a longer timeline for interest rate cuts as progress on inflation had “stalled”, adding inflation has significantly dropped from its pandemic-era peak of 9.1%, but remains stubbornly above the Fed’s target. Meanwhile, Atlanta Fed President Raphael Bostic noted that the US central bank wouldn’t cut rates until the end of the year.

On the Swiss front, Swiss National Bank (SNB) Chairman Thomas Jordan said on Saturday that monetary policy should remain focused on price stability. He said that economic growth and productivity are too low and many countries are running too much debt and excessive deficits. Apart from this, the escalating geopolitical tensions in the Middle East, particularly Israel and Iran, might boost safe-haven assets like Swiss France and cap the pair’s upside. 

• The US Dollar pares previous losses and returns to levels right below 0.9100
• A doji candle in the weekly chart and the bearish divergence on intra-day charts suggest the possibility of a deeper correction.
• USD/CHF bears need to breach 0.9075 support level.

The US Dollar has retraced previous losses, as news of an Israeli attack on Iran boosted the safe-haven CHF, to consolidate at previous ranges, above the 0.9075 resistance area.

On Friday, Chicago Fed President Austen Goolsbee has reiterated the the lack of progress on inflation and reaffirmed the data-dependant approach on further monetary policy decisions. The Dollar has traded moderately higher following these comments

Fundamentals are Dollar-supportive, as the Federal Reserve is likely to keep rates at high levels for a longer time, while the SNB has cut rates already and is likely to cut them again later this year.

USD/CHF Technical Analysis

The pair, however, has been trading without a clear direction below the 0.9145 resistance area following a strong rally from early January. The weekly chart is set to print a Doji candle, which often indicates that a potential correction might be ahead.

A bearish divergence on the 4-hour chart is also pointing to that direction, although bears need to confirm below 0.9075 to confirm a trend shift. Below there, the next targets would be the 0.9000 area and the trendline support at 0.8980. On the upside, a bullish reaction beyond 0.9245 would expose October’s high, at 0.9240.
 

USD/CHF 4-Hour Chart

• USD/CHF trims daily losses on expectations of de-escalating the Israel-Iran situation.
• An Iranian official stated there is currently no immediate plan for retaliation against the Israeli airstrikes.
• The US Dollar may gain ground on higher US Treasury yields as Fed officials conveyed hawkish messages on Thursday.

USD/CHF trades around 0.9080 during the European hours on Friday. The pair trims intraday losses after the statement made by an Iranian official that there is no immediate plan of retaliation against Israeli airstrikes.

The safe-haven Swiss Franc (CHF) strengthened as risk aversion spread across financial markets, triggered by reports from ABC News confirming Israeli missile strikes on a site in Iran on Friday, which heightened tensions in the Middle East. Additionally, Reuters cited Iran’s Fars News Agency reporting that locals heard explosions at the central Isfahan airport.

In the near term, the Swiss Franc is anticipated to encounter downward pressure as the Swiss National Bank (SNB) is projected to further decrease interest rates. With price pressures in the Swiss economy persisting below the targeted rate of 2%, SNB might implement another rate cut during its upcoming June meeting.

The US Dollar Index (DXY), which gauges the US Dollar (USD) against six major currencies, edges lower to near 106.10. Nevertheless, hawkish comments from Federal Reserve (Fed) officials on Thursday prompted a rise in US Treasury yields. At present, 2-year and 10-year yields on US Treasury bonds are at 4.96% and 4.58%, respectively. The higher yields may attract support for the Greenback, thus underpinning the USD/CHF.

Atlanta Fed President Raphael Bostic emphasized that US inflation is unreasonably high and stressed the need for the Fed to continue making strides in addressing inflation. Additionally, New York Fed President John Williams underscored the Fed's dedication to being guided by data and indicated that he does not currently see an urgent necessity to decrease interest rates.

• USD/CHF drops below 0.9100, dragged by a correction in the US Dollar.
• The US Dollar drops as traders reprice the interest rate outlook of other central banks.
• The SNB could cut interest rates further amid easing price pressures.

The USD/CHF pair falls below the round-level support of 0.9100 in Thursday’s European session. The Swiss Franc asset comes under pressure as the US Dollar drops amid cheerful market mood.

The US Dollar faces selling pressure after refreshing a five-month high. The US Dollar Index (DXY) drops to 105.85 as investors reassess speculation about rate cuts by other central banks from developed nations. Federal Reserve (Fed) Chair Jerome Powell supported keeping interest rates higher for an extended period, with inflation remaining stubbornly higher in the first three months of this year, but policymakers from other central banks also turned cautious about premature rate cuts.

This forced traders to price out early rate-cut bets by central banks, such as the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ).

Meanwhile, the appeal for risk-perceived assets remains strong. S&P 500 futures have posted significant gains in the London session. 10-year US Treasury yields correct further to 4.57%.

The US Dollar could regain bullish traction, knowing that the United States economy remains resilient due to strong economic growth, tight labor conditions and robust households’ spending. While other economies remain exposed to a technical recession.

On the Swiss Franc front, investors could capitalize the corrective move to build fresh longs. In the near-term, the Swiss Franc is expected to face more downside as the Swiss National Bank (SNB) is expected to reduce interest rates further. Price pressures in the Swiss economy remain below the desired rate of 2%, offering relief to SNB policymakers to lower borrowing rates further.

• USD/CHF is trending higher within a rising channel. 
• The trend is expected to continue to the next set of targets. 
• A break below the lower channel line would be required to signal a reversal. 

USD/CHF is rallying in an ascending channel on the daily chart. It is in a short and medium-term uptrend which is expected to continue higher given the old adage that the “trend is your friend.” 

USD/CHF Daily Chart

USD/CHF has been consolidating over the past few days in the lower 0.9100s but it will probably eventually break higher in accordance with the dominant uptrend. A break above the 0.9152 April highs would confirm more upside. 

The next target to the upside comes in at around 0.9173 where some major moving averages converge on higher time-frame charts. 

Following that, the next upside target would be located at 0.9240 the level of previous major swing highs made in October 2023.

The Relative Strength Index (RSI) is not overbought any longer, suggesting scope for further upside. 

A decisive break below the lower boundary of the channel, currently at roughly 0.9020, would reverse the outlook and bring into question the direction of the intermediate trend. 

A decisive break would be one characterized by a breach with a longer-than-average red candlestick or three consecutive red candlesticks. 

• USD/CHF edges lower to 0.9105 amid the softer USD on Wednesday. 
• The uncertainties and escalating tensions in the Middle East might benefit the Swiss Franc (CHF). 
• Fed’s Powell stated that monetary policy needs to be restrictive for longer, triggering the hope of delaying interest rate cuts. 

The USD/CHF pair faces some selling pressure to 0.9105 on Wednesday during the early European session. The downtick of the pair is supported by the decline of the US Dollar Index (DXY) to 106.20. Additionally, the ongoing geopolitical tensions in the Middle East continue to support the Swiss Franc (CHF), a traditional safe-haven currency. 

Late Tuesday, National Security Advisor Jake Sullivan said that new sanctions targeting Iran and sanctions against entities supporting the Islamic Revolutionary Guard Corps and Iran's Defense Ministry will be imposed in the coming days. Sullivan added that these new measures will "continue a steady drumbeat of pressure" to contain and degrade Iran's military capacity and effectiveness and confront the full range of its problematic behaviors. Meanwhile, western leaders have urged Israel to exercise restraint against escalation. Market players will closely monitor the development surrounding Israel and Iran tensions. Any escalating tensions might boost safe-haven assets like CHF and create a headwind for the USD/CHF pair. 

On the other hand, strong US economic data and hawkish comments from the US central bank remain to support the Greenback for the time being. The Federal Reserve's Jerome Powell stated that the US economy has not seen inflation come back to the 2% target and that monetary policy needs to be restrictive for longer. These remarks further dampen investors' hopes for meaningful rate cuts this year and lift the USD against its rivals. According to the CME FedWatch Tool, financial markets have priced in 67% odds that the Fed will cut interest rates in September. 

• USD/CHF climbs 0.12% amid global risk aversion, boosting demand for the US Dollar.
• Breaking past the November 1, 2023, high of 0.9112 suggests potential for more gains, targeting the 0.9200 resistance.
• A fallback below 0.9100 could prompt a test of the major support trendline around 0.9040.

The US Dollar posts minimal gains versus the Swiss Franc in the mid-North American session and gains 0.12%, trading at 0.9127 at the time of writing. Risk aversion, higher US Treasury yields, and solid US Retail Sales data boost the Greenback.

USD/CHF Price Analysis: Technical outlook

The pair remains upward biased after cracking the last cycle high of 0.9112 on November 1, 2023, which could pave the way for further upside. The USD/CHF peaked at around 0.9151, which, once surpassed, will expose the 0.9200 mark. A breach of the latter, and the pair could rally towards October 3, 2023, a high of 0.9245, with the next key resistance level seen at 0.9300.

On the other hand, if USD/CHF drops below 0.9100, that could open the door to challenge a three-and-a-half-month-old support trendline that passes around 0.9040. A further downside is seen at 0.9000.

USD/CHF Price Action – Daily Chart

• USD/CHF hovers below 0.9152, the highest since October reached on Monday.
• US Dollar strengthened as higher Retail Sales amplified expectations of the Fed prolonging higher policy rates.
• Swiss Franc faces challenges due to the likelihood of SNB implementing another rate cut in the June meeting.

USD/CHF recovers its recent losses registered in the previous session, trading near 0.9120 during the early European hours on Tuesday. The strength of the US Dollar (USD) provides support to bolster the USD/CHF pair. This strength is fueled by better-than-expected Retail Sales figures from the United States (US), which have increased expectations that the Federal Reserve (Fed) might maintain higher interest rates for an extended period.

Moreover, the US Dollar Index (DXY) extends its gains to near 106.30, while the yields on US Treasury bonds for both the 2-year and 10-year stand at 4.93% and 4.62%, respectively, at the time of writing. Escalating geopolitical tensions in the Middle East prompted investors to seek refuge in the safe-haven US Dollar (USD).

Federal Reserve (Fed) Bank of San Francisco President Mary Daly stated on Monday that while there has been notable progress on inflation, there is still further ground to cover. She emphasized the importance of being confident that inflation is on a path toward the target before taking action.

On the other side, in March, Swiss Producer and Import Prices (MoM) exhibited steady growth, increasing by 0.1%. However, Producer and Import Prices (YoY) experienced a more pronounced contraction, declining at a rate of 2.1% compared to the previous contraction of 2.0%.

The Swiss Franc (CHF) had already undergone a significant depreciation following the Swiss National Bank's (SNB) unexpected rate cut in March. With inflation showing moderation in March and business confidence remaining pessimistic, market speculation suggests that the SNB might implement another rate cut during its upcoming June meeting.

• USD/CHF gathers strength to break above 0.9150 as geopolitical tensions improve safe-haven demand.
• US bond yields soar as the Fed is expected to maintain a restrictive monetary policy for a longer period.
• Easing Swiss producer inflation boosts expectations of more rate cuts by the SNB.

The USD/CHF pair hovers near six-month high around 0.9150 in Monday’s European session. The Swiss Franc asset is expected to extend upside as the US Dollar strengthens due to potential risks of further escalation in Middle East tensions and receded hopes of Federal Reserve (Fed) lowering interest rates from the June meeting.

S&P 500 futures have posted significant gains in the European session, portraying some improvement in investors’ risk appetite. Though risky assets could retreat amid fears that Israel could retaliate to airstrike by Iran in which hundreds of drones and missiles were launched.

10-year US Treasury yields soar to 4.55% as the Federal Reserve (Fed) has no urgency to reduce interest rates with inflation remaining persistently higher. The speculation for the Fed reducing interest rates in the June and July meetings has faded and investors are now anticipating rate cuts in the September meeting.

The US Dollar Index (DXY) turns sideways after refreshing five-month high near 106.00. In today’s session, investors will focus on the monthly Retail Sales data for March, which will be published at 12:30 GMT. The Retail Sales data is estimated to have grown at a slower pace of 0.3% against the prior reading of 0.6%. A slowdown in Retail Sales would release some heat from the stubborn inflation outlook.

Meanwhile, the Swiss Franc remains on the backfoot as the Swiss National Bank (SNB) is expected to cut interest rates again in the June meeting, keeping in mind that inflation has come down sustainably below 2%.

The confidence in price pressures slowing further has deepened after the Swiss Producer and Import Prices grew moderately in March. Monthly producer inflation grew steadily by 0.1%. Annually, Producer and Import prices contracted at a higher pace of 2.1% from the former reading of 2.0%.

• USD/CHF declines, breaking below key support amid shifting market conditions.
• Despite downturn, upward trend holds; resistance at 0.9100, 0.9147 if recovery occurs.
• Continued falls could test supports at 0.9023 and key 0.9000 level.

The USD/CHF retreats from year-to-date (YTD) highs reached on Wednesday and drops below the 0.9100 figure as risk appetite improves. The major trades were down by 0.9099 by 0.32%.

USD/CHF Price Analysis: Technical outlook

From a technical perspective, the daily chart depicts the pair as upward biased. After bottoming around the 0.8300 figure, successive series of higher highs and higher lows, alongside the breach of key resistance levels like the 50, 100, and 200-day moving averages (DMAs), opened the door for further upside.

However, after peaking at around 0.9147, the USD/CHF dipped below the April 3 high turned support at 0.9095, but unless the pair closes below the latter, the rally remains alive. The first resistance would be the 0.9100 mark, followed by the year-to-date (YTD) high of 0.9147. Once cleared, the next stop would be the 0.9200 mark, closely followed by the October 3 high of 0.9245.

In the scenario of sellers pushing spot prices below 0.9095, that could pave the way for testing the April 10 swing low of 0.9023, followed by 0.9000.

USD/CHF Price Action – Daily Chart

• USD/CHF drops sharply to 0.9000 as US Dollar slumps ahead of US Inflation data.
• S&P 500 opens on a positive note, indicating demand for risk-perceived assets.
• The SNB is expected to cut interest rates again as Swiss inflation remains below 2%.

The USD/CHF pair falls sharply to 0.9010 in Tuesday’s early New York session. The Swiss Franc asset weakens as the market sentiment remains cheerful even though traders pare bets supporting Federal Reserve (Fed) rate cuts from the June meeting. Market expectations for the Fed reducing rates ease as strong United States Nonfarm Payrolls (NFP) data strengthens the inflation outlook.

The S&P 500 opens on a positive note, exhibiting decent demand for risky assets. 10-year US Treasury yields drop to 4.37% on fears that risks to employment and inflation could be imbalanced if interest rates remain higher for a long period.

On Monday, Chicago Federal Reserve President Austan Goolsbee said the central bank must consider for how long interest rates will remain higher on Monday. Goolsbee warned that the Unemployment Rate could rise if interest rates remain high for too long.

The US Dollar Index (DXY) falls to 103.90 amid cheerful market sentiment. Going forward, investors will focus on the US consumer price inflation data for March, which will be published on Wednesday.

Monthly headline and core inflation are both forecasted to have increased at a slower pace of 0.3% from 0.4% in February. In the same period, economists expect the annual headline CPI to accelerate to 3.4% from 3.2%, while the core inflation is anticipated to decelerate to 3.7% from 3.8%. The inflation data is expected to significantly influence market expectations for Fed rate cuts.

On the Swiss Franc front, investors expect that the Swiss National Bank will cut interest rates again as inflation remains consistently below 2%. The SNB led the global rate-cut cycle as it surprisingly announced a dovish interest rate decision in the March meeting. The central bank lowered its borrowing costs by 25 basis points (bps) to 1.5%.

• USD/CHF trades softer near 0.9050 in Tuesday’s early European session. 
• Fed’s Kashkari said if inflation continues to stall, no rate cuts would be a possible scenario.
• The rising Middle East geopolitical tensions might boost safe-haven flows, benefiting the CHF.  

The USD/CHF pair trades on a weaker note around 0.9050 during the early European session on Tuesday. The downtick of the pair is backed by the weaker US Dollar (USD). Nonetheless, the upbeat US March employment report and the hawkish comments from the Federal Reserve (Fed) officials might cap the downside of the USD/CHF pair. 

The US employment report for March showed that the economy added more jobs than expected, prompting speculation that the Fed might delay the easing cycle. The odds of a June rate cut declined to below 50% from a week earlier around 57%, according to the CME’s FedWatch tool. 

The Fed Chair Jerome Powell stated that the central bank could cut rates if the US economy continued on its current course. Meanwhile, Fed Governor Michelle Bowman said last week that the Fed might need to act further to ease price pressures. Minneapolis Fed President Neel Kashkari noted that he penciled in two interest rate cuts this year but if inflation continues to stall, no rate cuts would be a possible scenario. Investors will take more cues from the US Consumer Price Index (CPI) data for March, due on Wednesday. The firmer-than-expected reading could lower expectations for Fed rate cuts in June and lift the US Dollar (USD), while softer reading could spur speculation about rate cuts. 

On the Swiss front, the likelihood of an immediate ceasefire between Israel and Hamas remained gloomy, as the two sides had failed to reach an agreement despite repeated attempts by the US and its allies to help negotiate peace. Additionally, the top Iranian military advisor warned that none of the Israeli diplomatic missions are safe anymore after this week’s attack on the Iranian Consulate in Syria, per, Anadolu Agency reports. The escalating tensions surrounding geopolitical tensions in the Middle East could boost safe-haven assets like the Swiss Franc (CHF) and create a headwind for the USD/CHF pair. 

• USD/CHF edges higher as US Dollar improves on reduced chances of a Fed rate cut in June.
• The de-escalated tension in the Middle East could weaken the demand for safe-haven CHF.
• Higher US Treasury yields are contributing support for the Greenback.

USD/CHF gains ground for the second consecutive session on Monday, advancing to near 0.9050 during the European trading hours. Israel's decision to withdraw additional troops from Southern Gaza, possibly due to growing international pressure, has contributed to easing tensions. Additionally, peace talks between Israel and Hamas have resumed in Egypt, reducing concerns that may weaken demand for the safe-haven Swiss Franc (CHF).

In other news, the Swiss Unemployment Rate, not seasonally adjusted, increased by 2.3% month-on-month in March, slightly higher than the previous rise of 2.2%. The unemployment rate stood at 2.4% in March 2024, unchanged from the previous month on a non-seasonally adjusted basis.

At the time of writing, the US Dollar Index (DXY) trades higher around 104.30, propelled by a surprising beat in the Nonfarm Payrolls (NFP) report. The strong labor market performance in March, exceeding expectations, has reinforced bullish sentiment for the US Dollar.

The NFP reported a significant increase of 303,000 jobs in March, surpassing expectations of 200,000. However, the previous growth of 275,000 was revised downward to 270,000. Additionally, US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. On an annual basis, there was an increase of 4.1%, aligning with the market consensus but slightly lower than the prior reading of 4.3%.

According to the CME FedWatch Tool, the probability of a rate cut has decreased to 46.1%. Traders are now eagerly awaiting the release of US Consumer Price Index data for March, scheduled for Wednesday.