Key Moments
- The US Dollar softened after weaker US Retail Sales and Employment Cost Index data, prompting markets to price in 60 bps of rate cuts by year-end.
- USD/CHF is trading close to its January lows, with traders watching for a move toward or away from the 0.7870 resistance area.
- Upcoming US NFP, US Jobless Claims, Swiss CPI, and US CPI releases are expected to drive the next leg in USD/CHF.
Fundamental Overview
The US Dollar faced additional selling pressure following softer-than-expected US Retail Sales and Employment Cost Index (ECI) figures. In response to the weaker data, markets shifted to a slightly more dovish outlook, with expectations for policy easing increasing to 60 bps of rate cuts by year-end, up from 58 bps anticipated before the releases.
Attention is now centered on the US Nonfarm Payrolls (NFP) report, which is viewed as potentially pivotal for the next move in the Dollar. Given the current level of rate-cut expectations, stronger-than-anticipated labor market data could trigger a hawkish repricing, likely supporting broad-based US Dollar gains.
Conversely, a softer NFP print would reinforce expectations for further Federal Reserve easing and could even lead traders to bring forward the timing of rate cuts, particularly as some Fed officials have recently questioned the stability of labor market conditions. Under that scenario, the US Dollar would likely face renewed downward pressure as dovish Fed bets intensify.
On the Swiss Franc side, the backdrop remains largely unchanged. At its most recent meeting, the Swiss National Bank (SNB) kept policy settings steady and struck a somewhat more upbeat tone on the outlook, citing support from a lower US tariff rate. SNB policymakers continue to emphasize that the threshold for returning to negative interest rates remains high, leaving CHF performance largely driven by broader risk sentiment.
USD/CHF Daily Chart – Testing Levels Near January Lows
On the daily timeframe, USD/CHF has retreated back toward levels seen in January. Should the pair move down to revisit the January low, buyers may be inclined to enter with clearly defined risk just below that low, positioning for a potential rebound toward the 0.7870 resistance zone.
Sellers, by contrast, will be watching for a decisive break beneath the January low to reinforce the bearish trend and open the door to fresh cycle lows.
| Timeframe | Key Level | Bias | Trading Considerations |
|---|---|---|---|
| Daily | January low; 0.7870 resistance | Bearish bias near lows | Buyers eye support near January low; sellers look for a breakdown to new cycle lows |
| 4-hour | Downward trendline | Bearish momentum | Sellers favor entries near trendline; buyers await a breakout above it toward 0.7870 |
| 1-hour | 0.7687 resistance | Short-term inflection | Potential inverted head and shoulders; sellers lean against resistance, buyers seek neckline break |
USD/CHF 4-Hour Chart – Trendline Guides Bearish Momentum
On the 4-hour chart, a descending trendline is framing the current bearish momentum. From a risk-reward perspective, this trendline offers sellers a more attractive region to initiate or add to short positions, targeting further downside and potential new lows.
Buyers, on the other hand, will be looking for a sustained move above this trendline to signal the possibility of a more durable recovery, with an eye on extending gains toward the 0.7870 resistance area.
USD/CHF 1-Hour Chart – Watching 0.7687 Resistance and Pattern Setup
On the 1-hour timeframe, price action has carved out a minor resistance zone around 0.7687. Recent trading behavior suggests the potential formation of an inverted head and shoulders pattern, with this resistance acting as the neckline.
If USD/CHF approaches the 0.7687 level, sellers are likely to re-emerge near this resistance, using a defined stop-loss just above it while targeting fresh lows. Buyers, in contrast, will be monitoring for a clear breakout above the 0.7687 barrier to validate the pattern and to build long exposure, initially aiming for a move toward the descending trendline highlighted on the higher timeframe. The red lines on the chart represent the average daily range projected for today.
Key Upcoming Data Releases
The immediate catalyst on the calendar is the US NFP report, which is expected to set the tone for USD/CHF in the near term. This will be followed by US Jobless Claims data tomorrow, offering further insight into labor market conditions.
To close out the week, markets will receive Swiss CPI and US CPI releases on Friday, both of which could prove important for reassessing the inflation outlook and, by extension, rate expectations for the SNB and the Federal Reserve.
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