USDCHF Jumps 1 Cent as US Unemployment Ticks Down to 4.2%

The US Unemployment Rate ticked 0.1% lower in September, giving the USD a boost and sending USDCHF one cent higher, breaking above 0.86. The odds of a 50 bps FED rate cut in November have diminished now, with employment remaining in stable conditions, while inflation in Switzerland has been falling fast, which is keeping the Swiss Franc weak, thus resulting in a bullish breakout out of the range today.

The  USD/CHF  pair has been fluctuating between 0.84 and 0.85, with the 20 SMA acting as resistance on the daily chart. Market sentiment has been shaped by a mix of positive and negative factors. On the positive side, China’s economic stimulus and dovish policies from both the Federal Reserve and Swiss National Bank (SNB) have supported risk appetite. However, rising Middle Eastern tensions and weaker economic data have tempered this optimism, keeping traders cautious.

USD/CHF Chart Daily – MAs Have Been Broken

After more than a month of trading within this narrow range, the pair has finally broken out to the upside, driven by today’s strong NFP jobs data. The U.S. economy added 200K jobs, and the unemployment rate fell from 4.2% to 4.1%, pushing the pair above 0.86. The 50 SMA had acted as resistance prior to the release, but the robust jobs report gave USD/CHF the boost it needed to break free of its previous range.

FED Rate  Cut Odds and Market Outlook

Following this data, economists, including Bank of America, now anticipate the Fed will lower interest rates by just 25 basis points in November, down from the previously expected 50 basis points. Fed member Goolsbee praised the jobs report, noting that more positive data like this would suggest the U.S. has reached full employment. While the Fed will not overreact to a single report, continued strength in the labor market could signal a solid GDP performance. Despite the bullish momentum, Middle Eastern tensions remain a wildcard. Any escalation could quickly reverse risk sentiment, pushing investors toward safe havens like the CHF, which would send USD/CHF lower.

USD/CHF Live Chart