Buying USDCHF as Volatility in CHF to USD Rate Picks Up

The CHF to USD rate broke out of the 1-cent range on Friday after the US NFP, but retreated 80 pips lower today, which we used to open a buy USD/CHF signal. The sentiment has turned bullish for this pair in the short term as geopolitical tensions in the Middle East abated somewhat last week, so such a retreat presents a good opportunity for buyers.

Strong US Jobs Data Boosts USD/CHF

On Friday, U.S. Non-Farm Payroll (NFP) data showed a notable increase in employment, with over 250,000 jobs added in September. This figure followed a series of robust U.S. employment reports last week, indicating a resilient labor market. Additionally, the unemployment rate dropped by 0.1% to 4.1%. As a result, the likelihood of a 50 basis point rate cut by the Federal Reserve in November has decreased, leading to an uptick in the U.S. dollar. The USD/CHF pair saw a breakout, rising above the previous one-cent range to surpass the 0.86 level.

Meanwhile, inflation in Switzerland has been falling swiftly. The Swiss National Bank (SNB) recently cut rates by 25 basis points for the third consecutive time, suggesting that further rate cuts could be forthcoming. Despite the SNB’s revisions to inflation forecasts, which were significantly lowered, the Swiss Franc has shown weakness. However, following Friday’s breakout, the 200 SMA (purple) provided resistance, causing a brief pullback. After finding support at the 20 SMA (gray), the price has already rebounded by 30 pips, prompting a buy signal that has proven favorable.

USD/CHF Chart H4 – Previous Resistance Turns Into Support

USD/CHF has been trading within a range near the 0.8530 level since late August, with that area acting as a significant resistance point for over a month. Following Friday’s rise, buyers are supporting the price, suggesting this could serve as a base for further upside movement. With the recent U.S. jobs report, the market appears to align with the Fed’s projections, stabilizing expectations for future rate cuts.

Outlook Amid Geopolitical Concerns and Economic Data

As global attention remains on tensions in the Middle East and upcoming economic data, USD/CHF could continue its upward trend if no new escalations occur and U.S. data remains strong. Conversely, if economic indicators weaken substantially, expectations for aggressive Fed cuts might resurface, which could put downward pressure on USD/CHF.

USD/CHF Live Chart