USDCHF Overbought But Has Room to Run Higher to 0.90

USDCHF has made some decent gains in October, climbing 1.5 cents, but it seems overbought on the weekly chart now and in the last three days it has stagnated, unlike USD/JPY which climbed above 150 today, overtaking last week’s high. However, there’s still some more room to the upside if there isn’t any escalation of tensions in the Middle East.

USD/CHF Chart Weekly – Stochastic Is Almost Overbought

As USD buyers returned this month, geopolitical tensions in the Middle East have eased, with no indications of escalating into a major conflict. The USD/CHF exchange rate has climbed by over one cent recently, reflecting renewed strength in the dollar. Additionally, dovish remarks from the Swiss National Bank’s (SNB) vice president have supported the idea of further interest rate cuts. Following the SNB’s 75 basis point reduction, he mentioned that inflation forecasts for Switzerland have dropped significantly, hinting at the possibility of more cuts, though no firm commitments were made.

With inflation staying low and the economy showing signs of weakness, further rate reductions seem increasingly likely. This combination of a stronger dollar and a potentially softer Swiss monetary policy has fueled the rise in USD/CHF.

USD/CHF Rebound from Lower Range

Over the past two years, the USD/CHF pair has fluctuated within an 8-cent range, typically between 0.84 and 0.92. Currently, the pair is in the early stages of a rebound from the lower end of this range, with the increase beginning in October. High geopolitical tensions in the Middle East had initially supported the Swiss Franc, but as the potential for a broader conflict involving Israel and Iran diminishes, the Franc has lost some of its appeal.

Swiss National Bank’s Influence on the Franc

Despite the Swiss National Bank (SNB) cutting rates further in its recent meeting, this move did not have a significant impact on the USD/CHF pair. However, on the daily chart, the pair is showing a gradual rise, with buyers aiming for the key resistance at 0.88, where the 50-weekly SMA (yellow) acts as a hurdle.

Political Factors and USD Strength

A potential Trump victory in the upcoming U.S. presidential election is already being factored into market expectations. A Trump win could strengthen the USD further, as it may drive faster GDP growth, bolstering the dollar’s appeal in the months ahead. At the 0.88 level, sellers are expected to step in, aiming for a decline toward the 0.84 level, managing risk above the trendline. Meanwhile, buyers are waiting for a break higher to extend their bullish bets toward the 0.89 and 0.90 handles.

USD/CHF Live Chart