CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF may appreciate further due to fading odds of bumper rate cuts by the Fed in 2024.
• The US Dollar receives support from market caution ahead of the US presidential election.
• The recent lower Swiss inflation rate increased the dovish sentiment surrounding the SNB.

USD/CHF remains steady after registering losses in the previous session, maintaining its position above 0.8650 during Asian trading hours on Friday. This level is near its two-month peak of 0.8686, reached on Wednesday.

The strength of the USD/CHF pair could be linked to the robust performance of the US Dollar (USD), driven by rising expectations that the Federal Reserve (Fed) will take a less aggressive approach to interest rate cuts than previously thought.

Additionally, the Greenback is bolstered due to uncertainties regarding the upcoming US presidential election. Vice President Kamala Harris leads in the six-day poll, which closed on Monday, held a marginal 46% to 43% lead over former President Donald Trump, a new Reuters/Ipsos poll found.

On Thursday, Republican nominee Donald Trump stated that the Trump administration will build an economy that lifts up all communities in the United States (US). Meanwhile, Vice President Kamala Harris enjoyed the backing of rock legend Bruce Springsteen, entertainer Tyler Perry, and former President Barack Obama at a rally in Georgia.

The Swiss Franc (CHF) could face challenges due to heightened expectations of another interest rate cut by the Swiss National Bank (SNB) at its upcoming December meeting. This could be attributed to the recent inflation rate, which stood at 0.8% in September, marking a three-year low and down from 1.1% the previous month.

The Swiss Franc may restrain its downside due to safe-haven flows amid uncertainties regarding Middle East situation. Traders watch for Israel's response to Iran's missile attack on October 1. In parallel, US and Israeli officials are preparing to resume talks on a potential ceasefire and the release of hostages in Gaza in the coming days.

US Secretary of State Antony Blinken stated Thursday that the United States does not support a prolonged Israeli campaign in Lebanon, while France has advocated for an immediate ceasefire and diplomatic efforts.

• USD/CHF maintains its position near a two-month high of 0.8686, reached on Wednesday.
• Rising geopolitical tensions might have provided minor support for the safe-haven Swiss Franc.
• Traders will likely observe the US Purchasing Managers Index scheduled to be released on Thursday.

USD/CHF trades around 0.8660 during the early European session on Thursday, hovering around the two-month high of 0.8686, which was recorded on Wednesday. The USD/CHF pair could appreciate further as the Swiss Franc (CHF) faces challenges due to heightened expectations of another interest rate cut by the Swiss National Bank (SNB) at its upcoming December meeting.

The Swiss Franc may receive some support from safe-haven flows amid rising concerns over the Middle East conflict. On Wednesday, Israeli strikes hit southern Beirut, while US Secretary of State Antony Blinken toured the region, advocating for a ceasefire in both Gaza and Lebanon.

Moreover, Iran-backed Hezbollah intensified its attacks on Israel, deploying "precision missiles" for the first time and launching new types of drones targeting Israeli sites. Hezbollah also claimed to have struck an Israeli military factory near Tel Aviv, per Reuters.

The US Dollar weakened slightly, driven by a modest dip in US Treasury yields. However, the downside risk for the Greenback would be limited as rising inflation concerns have lessened the chances of a significant rate cut by the Federal Reserve in November. According to the CME FedWatch Tool, there is an 88.9% probability of a 25-basis-point rate cut, with no expectation of a larger 50-basis-point cut.

Traders are likely to keep an eye on the S&P Global Purchasing Managers Index (PMI), a leading indicator gauging US private-business activity in the manufacturing and services sector, which is set to be released on Thursday.

• USD/CHF is closing in on the key 100-day SMA, where it will probably encounter resistance. 
• The pair is in an established short and medium-term uptrend and the odds favor more upside to come. 

USD/CHF extends its uptrend from the late September lows and approaches resistance at the 100-day Simple Moving Average (SMA), currently situated at 0.8697. 

USD/CHF Daily Chart 

USD/CHF has now reached the target generated after it broke out of its September range, at 0.8680 – the 100% Fibonacci (Fib) extrapolation of the height of the range higher. This could signify that bullish pressure will lessen. 

A break above the 100-day SMA and the 0.8700 level could lead to a further extension to the 0.8750 resistance level (August 15 high). 

USD/CHF’s short and medium-term trends are bullish but its longer-term trend is probably still bearish despite the recent strong recovery.

• USD/CHF rises as US Dollar advances amid higher Treasury yields.
• Fed’s Daly stated that the economy is evidently in a stronger position, with a significant decline in inflation.
• Lower Swiss inflation strengthens the likelihood of the SNB delivering another rate cut in December.

USD/CHF appreciates and trades around 0.8680 during the early European hours on Wednesday. This upside of the pair could be attributed to solid US Dollar (USD). Additionally, improved US Treasury yields also contributed support for the Greenback and underpinned the USD/CHF pair.

The US Dollar Index (DXY), which tracks the US Dollar against six major currencies, is trading near a two-month high at 104.30. Meanwhile, yields on 2-year and 10-year US Treasury bonds are at 4.05% and 4.22%, respectively.

Recent indicators of economic strength and worries about a possible rebound in inflation in the United States (US) have reduced the likelihood of a substantial interest rate cut by the Federal Reserve in November. According to the CME FedWatch Tool, there is an 89% chance of a 25-basis-point rate cut, with no expectation for a more significant 50-basis-point reduction.

In a post on the social media platform X, Federal Reserve Bank of San Francisco President Mary Daly stated that the economy is clearly in a better position, with inflation having fallen significantly and the labor market returning to a more sustainable path.

Market participants expect another interest rate cut by the Swiss National Bank (SNB) at its upcoming December meeting. The continued slowdown in Swiss inflation strengthens the dovish sentiment surrounding the SNB. In September, the SNB reduced its key rate for the third time in a row by 0.25%, bringing it to 1%.

• USD/CHF may regain its ground as US Treasury yields continue to surge.
• CME FedWatch Tool suggests an 86.9% chance of the Fed’s 25-basis-point rate cut in November, with expecting no bumper cut.
• The Swiss Franc faces challenges as lower inflation reinforces the likelihood of another rate cut by the SNB in December.

USD/CHF offers its gains from the previous session, trading around 0.8650 during the early European hours on Tuesday. This downside of the pair could be limited as the US Dollar (USD) gained support following a surge in US Treasury yields, which climbed over 2% on Monday. At the time of writing, the 2-year and 10-year US Treasury bond yields stand at 4.04% and 4.20%, respectively.

Recent economic data dispelled the likelihood of a bumper rate cut by the Federal Reserve (Fed) in November. According to the CME FedWatch Tool, the likelihood of a 25-basis-point rate cut in November is 89.1%, with no expectation of a larger 50-basis-point cut.

On Monday, Federal Reserve Bank of Minneapolis President Neel Kashkari highlighted that the Fed is closely monitoring the US labor market for signs of rapid destabilization. Kashkari cautioned investors to anticipate a gradual pace of rate cuts over the coming quarters, suggesting that any monetary easing will likely be moderate rather than aggressive.

The Swiss Franc (CHF) faces pressure as a continued slowdown in Swiss inflation strengthens expectations of another rate cut by the Swiss National Bank (SNB) at its upcoming December meeting. In September, the SNB reduced its key rate for the third time in a row by 0.25%, bringing it to 1%. Inflation also fell for the third consecutive month, reaching 0.8% in September—its lowest level in over three years—down from 1.1% in August.

However, the CHF could find support from safe-haven demand amid uncertainty surrounding the US election and rising geopolitical tensions in the Middle East. Israel's strikes on Hezbollah-linked financial sites in Beirut have heightened fears of an escalating conflict.

In the US presidential race, Democratic candidate Kamala Harris and Republican Donald Trump delivered contrasting messages as they worked to sway undecided voters in the final two weeks leading up to Election Day.

• USD/CHF drops to near 0.8630 even though the US Dollar resumes its upside journey.
• The SNB is expected to cut interest rates again in December.
• Investors expect the Fed to reduce interest rates gradually.

The USD/CHF pair drops to near 0.8630 from the two-month high of 0.8370 in Monday’s North American session. The Swiss Franc pair corrects even though the US Dollar (USD) rebounds after a mild sell-off on Friday, suggesting sheer strength in the Swiss currency.

Investors have underpinned the Swiss Franc against the Greenback despite the Swiss National Bank (SNB) is expected to cut interest rates again in December. This would be the fourth straight interest rate cut in a row.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back to near 103.70 and aims to extend its upside above the 11-week high around 104.00. The appeal of the Greenback has strengthened as investors expect the Federal Reserve (Fed) to cut interest rates at a moderate pace.

According to the CME FedWatch tool, the Fed is expected to cut interest rates by 25 basis points (bps) in November and December. Earlier, traders were anticipating the Fed to deliver a larger-than-usual rate cut of 50 bps in November. However, they priced out the scenario after a slew of upbeat United States (US) economic data for September.

The upside move in the USD/CHF pair appears to have paused for a while. However, the upside move could resume after it breaks above October 17 high of 0.8670. A breakout move will drive the asset toward the round-level resistance of 0.8700 and the August 15 high of 0.8750.

In an alternate scenario, a downside move below the September 12 low of 0.8550 will drag the asset toward the psychological support of 0.8500, followed by the October 2 low of 0.8450.

The near-term trend is expected to remain upbeat as the asset trades above the 20- and 50-day Exponential Moving Averages (EMAs), which trade around 0.8580.

The 14-day Relative Strength Index (RSI) oscillates near 60.00. A bullish momentum would trigger if the RSI (14) sustains above 60.00.

USD/CHF daily chart

• USD/CHF trades in positive territory around 0.8655 in Monday’s early European session. 
• The bets of a less aggressive Fed rate cuts support the USD.
• The Middle East geopolitical tensions could boost the Swiss Franc. 

The USD/CHF pair trades on a firmer note near 0.8655 on Monday during the early European trading hours. The prospect that the US Federal Reserve (Fed) will proceed with modest rate cuts over the next year underpins the Greenback against the Swiss Franc (CHF). However, the ongoing geopolitical tensions in the Middle East might cap the pair’s upside. 

A shift in Fed policy expectations to a more moderate easing phase after a slew of stronger-than-expected US economic data provides some support to the US Dollar (USD) broadly. Meanwhile, the US Dollar Index (DXY), measuring the USD’s value against six major currencies, currently trades near the three-month high of 103.60. 

US rate futures have priced in a 95% odds that the Fed will cut rates by 25 basis points (bps) in November, and a 5% chance that the US central bank will hold its rate, according to LSEG estimates. "Speculation that the Fed could follow September's 50 bps rate cut with another similarly sized move has been blown away by a round of data pointing to a resilient U.S. economy," noted Jane Foley, head of FX strategy, at Rabobank in London.

On the Swiss front, the uncertainty surrounding the US election and geopolitical risks might prompt higher demand for safe-haven currencies like the CHF. The local news agency Aljazeera reported early Monday that the Israeli army launched a series of new air strikes across Lebanon, including Beirut’s suburbs, after it announced the targeting of Hezbollah’s al-Qard al-Hassan financial institution’s offices. 

• USD/CHF grips gains near 0.8670 as traders priced out Fed large rate cut bets.
• A slew of upbeat US data has pointed to US economic resilience.
• The SNB is expected to extend its policy-easing cycle further.

The USD/CHF pair holds onto gains near an eight-week high of 0.8670 in Friday’s London session. The Swiss Franc pair remains firm as traders have priced out expectations for the Federal Reserve (Fed) to cut interest rates by a larger-than-usual size of 50 basis points (bps) again in the November meeting.

Traders expect the Fed to go slow on rate cuts as a slew of United States (US) economic data has pointed to economic resilience. After surprisingly upbeat Nonfarm Payrolls (NFP) and the ISM Services PMI for September, monthly Retail Sales data for the same period has come in better than expected. Thursday’s Retail Sales data rose at a faster-than-expected pace of 0.4%.

According to the CME FedWatch tool, there is a strong probability for the Fed to reduce interest rates by 50 bps in the remaining year. Also, the Fed is expected to cut its borrowing rates by 25 bps in each of the two meetings in November and December, which remained this year.

On the political front, market speculation for the US presidential elections that are scheduled on November 5 will influence the US Dollar. According to FiveThirtyEight’s daily election poll tracker, Democratic Kamala Harris is leading polls and has a 2.4-percentage-point lead over former President Donald Trump.

In the Swiss region, easing price pressures has boosted expectations of more interest rate cuts by the Swiss National Bank (SNB). Swiss annual Consumer Price Index (CPI) decelerated to 0.8% in September, the lowest in more than three years, despite the SNB reducing its key borrowing rates in each of the three meetings that took place this year.

• USD/CHF trades with mild negative bias around 0.8655 in Friday’s early European session. 
• Stronger US Retail Sales reinforce bets that the Fed will pursue modest rate cuts next year, which might support the USD. 
• Any signs of escalating Middle East geopolitical tensions might boost the CHF and cap the pair’s upside. 

The USD/CHF pair trades with mild losses near 0.8655 during the early European session on Friday. The increasing bets that the US Federal Reserve (Fed) would cut rates less aggressively might cap the downside for the pair in the near term. Traders will take more cues from the US housing data and Fedspeak later on Friday. 

Rising demand for the USD in the backdrop of waning expectations of outsized Fed rate cuts and encouraging US economic data might support the pair. The US Census Bureau revealed on Thursday that US Retail Sales climbed by 0.4% MoM in September versus a 0.1% rise in August, above the market consensus of 0.3%. Additionally, the US Initial Jobless Claims for the week ending October 11 increased to 241,000. The figure came in below the consensus and the previous week's of 260,000 (revised from 258,000).

Meanwhile, the US Dollar Index (DXY), which measures the greenback against six major rivals, currently trades near the highest level since August 2 around 103.65. 

Goldman Sachs analysts said on Wednesday that they expect the Fed to cut consecutive 25 basis points (bps) from November 2024 through June 2025 as fears of a potential US recession ease, per the Economic Times. According to the CME Fed Watch Tool, money markets are now pricing a 90.3% probability of a 25bps rate reduction next month.

On the Swiss front, the ongoing geopolitical tensions in the Middle East and the uncertainty surrounding the global economy might boost the safe-haven flows, benefiting the Swiss Franc (CHF). Israel claimed its forces assassinated Hamas commander Yahya Sinwar in the Gaza Strip. Prime Minister Benjamin Netanyahu declared Sinwar's killing as "the beginning of the day after Hamas." He said that Israel would continue fighting Hamas in Gaza until all hostages are returned home, per CNN. 

• USD/CHF is trending higher on a short and medium-term basis. 
• It is likely to continue up towards bullish targets. 

USD/CHF unfolds a text-book trend higher with alternating climbing peaks and troughs on the 4-hour chart. 

The pair is probably in an uptrend on both a short and medium-term basis and given the principle in technical analysis that “the trend is your friend” the odds favor a continuation higher. 

USD/CHF 4-hour Chart 

USD/CHF will probably reach the target generated after it broke out of its September range, at 0.8680, the 100% Fibonacci (Fib) extrapolation of the height of the range higher. A break above that level could lead to a further extension to the 0.8750 resistance level (August 15 high). 

USD/CHF has already met conservative target for the breakout from the range at 0.8627, the 61.8% Fib level. This could mean bullish pressure may lessen. 

The Relative Strength Index (RSI) momentum indicator is showing bearish divergence with price when comparing the October 16 and 17 lows (red dotted lines on chart). Although price made a higher low on October 17 compared to the day before, the RSI made a lower low. This could point to mild underlying weakness, however, it does not alone suggest a change of trend.

A chart gap opened on Monday morning and there is a risk the market could pull back all the way to fill this gap. If so, it could correct down to 0.8574. It would require a break below the former range highs at 0.8541 to confirm a probable change of trend.  

USD/CHF’s longer-term trend is probably still bearish despite the strong recovery over recent weeks. 

• USD/CHF pulls back from a two-month high, albeit it lacks follow-through selling.
• Bets for smaller Fed rate cuts continue to lend support to the USD and the major.
• A positive risk tone to undermine the safe-haven CHF and limit losses for the pair.

The USD/CHF pair retreats a few pips from a two-month peak touched earlier this Thursday and trades around mid-0.8600s, nearly unchanged for the day during the first half of the European session. Meanwhile, the fundamental backdrop seems tilted in favor of bullish traders and suggests that the path of least resistance for spot prices remains to the upside. 

The US Dollar (USD) climbs to its highest level since early August and continues to draw support from growing acceptance that the Federal Reserve (Fed) will proceed with modest interest rate cuts over the next year. This keeps the yield on the benchmark 10-year US government bond above the 4% mark, which acts as a tailwind for the buck and validates the positive outlook for the USD/CHF pair. 

Apart from this, the prevalent risk-on environment, bolstered by China's stimulus measures, could undermine the safe-haven Swiss Franc (CHF) and support prospects for an extension of the USD/CHF pair's move-up witnessed over the past two weeks or so. Even from a technical perspective, the recent breakout above the 50-day Simple Moving Average (SMA) compliments the constructive setup. 

Traders now look forward to the US economic docket – featuring the release of monthly Retail Sales, the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production figures. The data will be assessed for cues about the Fed's timeline for potential rate cuts, which, in turn, will drive the USD demand and produce short-term opportunities around the USD/CHF pair. 

The market focus will then shift to the Chinese macro data dump, including the third quarter GDP report, due for release during the Asian session on Friday, which will influence the broader risk sentiment. Nevertheless, the aforementioned supporting factors suggest that any meaningful corrective decline could be seen as a buying opportunity and is more likely to remain cushioned amid a bullish USD.

• USD/CHF gains ground as recent US data have tempered the odds of more bumper rate cuts by the Fed.
• Improved US Treasury yields contribute support to strengthen the Greenback.
• The downside of the Swiss Franc could be restrained due to safe-haven flows amid rising Middle-East tensions.

USD/CHF extends its gains for the second successive day, hovering around 0.8660 during the Asian trading hours on Thursday. The US Dollar (USD) gains ground as strong labor and inflation data has tempered expectations for aggressive easing by the Federal Reserve (Fed). According to the CME FedWatch Tool, there is currently a 92.1% probability of a 25-basis-point rate cut in November, with no expectation of a larger 50-basis-point reduction.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, continues its winning streak for the fifth consecutive session, bolstered by the improved US Treasury yields after two days of losses. The DXY trades around 103.60, maintaining its position near two-month highs with 2-year and 10-year yields on US Treasury bonds standing at 3.94% and 4.03%, respectively, at the time of writing.

The downside of the Swiss Franc (CHF) could be limited due to safe-haven flows amid rising tensions in the Middle East. On Wednesday, Israel intensified its airstrikes on Lebanon, including an attack that destroyed the municipal headquarters of a major town, resulting in the deaths of 16 individuals, including the mayor. This marks the largest assault on an official Lebanese state building since the onset of the Israeli air campaign, according to Reuters.

The Swiss inflation rate fell to 0.8% in September, marking a three-year low and raising the probability of another 25-basis-point rate cut by the Swiss National Bank (SNB) in December. In September, the SNB had already reduced its key policy rate by 25 basis points to 1%, representing the third consecutive cut and bringing borrowing costs to their lowest level since early 2023.

Traders will likely observe Swiss Trade Balance data scheduled to be released on Thursday. The focus will shift to the US Retail Sales data, set to be released later in the North American session. Expectations are for monthly consumer spending in the United States to increase by 0.3% in September, up from 0.1% in the previous reading.

• USD/CHF is trading in a mini-range after pulling back from new highs. 
• This is probably a pause before the pair goes to new highs. 

USD/CHF is consolidating within its short-term uptrend in what is likely to be a temporary pull back before the market goes higher again.

The pair is probably in a short-term uptrend now given the rising sequence of peaks and troughs since it broke out of the range-bound consolidation in August and September. 

USD/CHF 4-hour Chart 

USD/CHF will probably reach the target generated after it broke out of the range, at 0.8680, the 100% Fibonacci (Fib) extrapolation of the height of the range higher. A break above 0.8641 (October 14 high) would provide confirmation. A break above that level could lead to a further extension to the 0.8750 resistance level (August 15 high). 

USD/CHF has already met the conservative target at 0.8627, the 61.8% Fib level.

A chart gap opened on Monday morning and there is a risk the market could pull back all the way to fill this gap. If so, it could correct down to 0.8574. It would require a break below the former range highs at 0.8541 to confirm a probable change of trend. 

• USD/CHF edges higher as robust US labor and inflation data have diminished the likelihood of bumper rate cuts by the Fed.
• Atlanta Fed President Raphael Bostic expects just one more interest rate cut of 25 basis points this year.
• The Swiss Franc strengthened as lower inflation in September reduced the need for the SNB to implement substantial rate cuts.

USD/CHF retraces its recent losses registered in the previous session, trading around 0.8630 during the early European hours on Wednesday. The US Dollar (USD) continues to gain support as robust US Employment and Consumer Price Index (CPI) data have dampened expectations of aggressive Federal Reserve (Fed) easing.

Markets are now anticipating a total of 125 basis points in rate cuts over the next 12 months. According to the CME FedWatch Tool, there is currently a 94.1% probability of a 25-basis-point rate cut in November, with no expectation of a larger 50-basis-point reduction.

On Tuesday, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, indicated that he expects only one additional interest rate cut of 25 basis points this year, in line with his projections from the US central bank's meeting last month. "The median forecast called for a total of 50 basis points in cuts, on top of the 50 basis points already implemented in September," according to Reuters.

On the Swiss side, the yield on the 10-year government bond declined to 0.41% as traders assess the broader economic and financial environment in Switzerland. Bond yields are often a reflection of inflation expectations. Low inflation typically bolsters the currency by preserving its purchasing power, which means the Swiss Franc (CHF) could find support even as bond yields decrease.

• USD/CHF is correcting back after peaking as it extends its uptrend. 
• The pair will probably resume its bullish bias after the pull back has completed. 

USD/CHF is pulling back within its short-term uptrend after peaking at 0.8642 on Monday. The move is only likely to be a temporary correction, however, before the pair resumes its uptrend and extends its sequence of higher highs and higher lows. 

USD/CHF 4-hour Chart 

USD/CHF will probably reach the target generated after it broke out of the range, at 0.8680, the 100% Fibonacci (Fib) extrapolation of the height of the range higher. It has already met the conservative target at 0.8627, the 61.8% Fib level.

The Relative Strength Index (RSI) has exited the overbought region giving traders a signal to liquidate their long positions and sell short. 

A chart gap opened on Monday morning and there is a risk the market could pull back all the way to fill this gap. If so, it could correct down to 0.8574. It would require a break below the former range highs at 0.8541 to confirm a probable change of trend. 

• USD/CHF erodes a part of the overnight strong gains to a nearly two-month top.
• A modest USD pullback turns out to be a key factor exerting downward pressure.
• Smaller Fed rate cut bets should limit the downfall for the USD and the major.

The USD/CHF pair struggles to capitalize on the previous day's strong move up to a nearly two-month high and attracts some intraday sellers during the first half of the European session on Tuesday. The downtick drags spot prices to the 0.8615 region, or a fresh daily low in the last hour and is sponsored by a modest US Dollar (USD) pullback.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats from its highest level since August 8 as bullish traders opt to take some profits off the table following the recent strong rally since the beginning of this month. Any meaningful USD corrective decline, however, seems elusive in the wake of firming expectations for a less aggressive policy easing by the Federal Reserve (Fed).

In fact, the markets have now fully priced out the possibility of another jumbo rate cut and expect the US central bank to lower borrowing costs by 25 basis points (bps) at the November policy meeting. This keeps the yield on the benchmark 10-year US government bond above the 4% threshold, which should continue to act as a tailwind for the Greenback and help limit the depreciating move for the USD/CHF pair. 

Apart from this, a generally positive tone across the global equity markets might hold back traders from placing bullish bets around the safe-haven Swiss Franc (CHF) and offer support to the currency pair. Hence, it will be prudent to wait for strong follow-through selling before confirming that the strong move-up witnessed over the past two weeks or so has run out of steam and positioning for further losses. 

Next on tap is the release of the Empire State Manufacturing Index from the US, which, along with speeches by influential FOMC members, will drive USD demand later during the North American session. Apart from this, the broader risk sentiment might provide some impetus to the USD/CHF pair and allow traders to grab short-term opportunities.

• USD/CHF continues rising and might have established a medium-term uptrend. 
• It is likely to continue higher although it is potentially overbought and a downside gap risks closing. 

USD/CHF is rising up and forming a sequence of higher highs and higher lows which indicates it is probably in both a short and – now also – a medium term uptrend. Given it is a key tenet of technical analysis that “the trend is your friend” the odds favor more upside to come. 

USD/CHF 4-hour Chart 

USD/CHF could continue rising until it reaches the next target to the upside which was generated when it broke out of the range. This target lies at 0.8680, the 100% Fibonacci (Fib) extrapolation of the height of the range higher. It has already met the conservative target at 0.8627, the 61.8% Fib level.

The Relative Strength Index (RSI) is in overbought territory and if it remains there on a closing basis it will advise traders not to add to their existing long positions. 

A chart gap opened on Monday morning and there is a risk the market could pull back to fill this gap at some point. 

• USD/CHF gains ground as traders expect the Fed to slow the pace of interest rate cuts.
• Future markets suggest 89% odds of a 25 basis point cut in November, with no expectation for a 50-basis-point cut.
• Swiss Producer and Import Prices fell by 0.1% MoM and 1.3% YoY in September.

USD/CHF continues to gain ground for the second day, trading around 0.8600 during the early European hours on Monday. The upside of the USD/CHF pair could be attributed to a solid US Dollar (USD), fueled by expectations that the US Federal Reserve (Fed) will slow the pace of borrowing cost reductions more than previously anticipated.

Traders are looking for a 25 basis points (bps) rate cut from the Fed in November, following the release of the Producer Price Index (PPI) data from the United States last Friday. According to the CME FedWatch Tool, the markets are pricing in almost 89% chance of a 25 basis point rate cut in November, with no expectation for a 50-basis-point reduction.

In September, the US Producer Price Index (PPI) remained unchanged at 0%, below August’s 0.2% month-on-month increase. Meanwhile, the monthly core PPI, which excludes food and energy prices, expanded by 0.2% as expected, down from 0.3% the prior month.

In Switzerland, Producer and Import Prices declined by 0.1% month-over-month in September, contrary to the expected increase of 0.1%, following a 0.2% rise in August. On an annual basis, Producer and Import Prices dropped by 1.3%, slightly exceeding the previous decline of 1.2%. This marked the seventeenth consecutive period of decline.

The Swiss Franc (CHF) receives downward pressure from the rising likelihood of more rate cuts by the Swiss National Bank (SNB). "With inflation being reasonably low in Switzerland and with an economy that could grow faster, that tends in the direction of a lower SNB’s policy rate.

• USD/CHF remains supported near 0.8560 with US PPI on the horizon.
• Surprisingly upbeat US employment and hot inflation data for September have eradicated the Fed 50 rate cut scenario.
• The SNB is expected to cut interest rates further this year.

The USD/CHF pair wobbles near the immediate support of 0.8560 in Friday’s European session. The Swiss Franc pair edges higher despite the US Dollar (USD) exhibits a subdued performance. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, falls slightly but remains close to an eight-week high of around 103.00.

The outlook of the US Dollar remains firm as traders are expecting the Federal Reserve (Fed) to cut interest rates again in the November policy meeting but at a gradual pace of 25 basis points (bps), according to the CME FedWatch tool.

Lately, market participants were anticipating the Fed to deliver another 50-bps cut next month, as seen in September. Market expectations for the Fed's sizeable rate cut waned after the blowout United States (US) job data and hotter-than-expected Consumer Price Index (CPI) report for September.

For more cues on the Fed’s interest rate outlook, investors will focus on the US Producer Price Index (PPI) data for September, which will be published at 12:30 GMT. The PPI report is expected to show that the headline producer inflation rose by 1.6%, slower than 1.7% in August year-on-year. On the contrary, the annual core PPI is estimated to have accelerated to 2.7% from the prior release of 2.4%.

In the Swiss economy, the Swiss National Bank (SNB) is expected to cut interest rates further this year. "With inflation being reasonably low in Switzerland and with an economy that could grow faster, that tends in the direction of a lower policy rate," Martin told an event organized by the Swiss Financial Analysts Association in Zurich, Reuters reported.

An improvement in the likelihood of more rate cuts from the SNB would keep the Swiss Franc (CHF) on the backfoot.