USD/CHF slipped on Thursday, down 0.34% in the North American session, as the US Dollar’s six-day advance lost momentum alongside lower US Treasury yields, despite a strong US Core PCE inflation print. The pair was trading below 0.8100 after touching a year-to-date peak of 0.8139 on Wednesday, with price action now suggesting a potential reversal signal.
From a technical perspective, the recent run-up has produced a ‘tweezer top’ pattern, pointing to the risk of a retracement towards 0.8000. Momentum is still described as bullish, while the Relative Strength Index (RSI) has pushed above 70, and the subsequent dip implies sellers are gaining traction. Initial support sits at 0.8050 and then 0.8000; if that gives way, attention shifts to 0.7910, where the June 17 daily low converges with the 200-day SMA. Resistance is seen at 0.8100, with a move back above that level putting 0.8139 in view, before 0.8200.
Technical Signals Point to Short-Term Weakness
Given the stalling momentum in USD/CHF, we see the ‘tweezer top’ formation as a clear signal of potential short-term weakness. The pair’s failure to hold gains above 0.8100, even with strong US inflation data, suggests the recent rally is exhausted. This technical setup presents a clear opportunity for bearish positions over the next few weeks.
We believe derivative traders should consider buying put options with strike prices at or below the 0.8050 and 0.8000 support levels. July 2026 and August 2026 expiries would provide enough time for this expected retracement to play out. The Relative Strength Index (RSI) retreating from overbought levels above 70 further supports this near-term bearish outlook.
Market Data and Historical Parallels Support Bearish Bias
This view is strengthened by current market data. Despite the US Core PCE for May 2026 being released today at a higher-than-expected 3.1%, the US 10-year Treasury yield has unexpectedly dipped to 4.21%. This divergence suggests markets may be more concerned about a potential slowdown, which weakens the dollar’s appeal.
Furthermore, recent hawkish comments from the Swiss National Bank (SNB) about curbing inflation add a fundamental reason for Swiss Franc strength. For those looking for a more conservative strategy, selling a bear call spread with a short strike above the year-to-date high of 0.8139 could be effective. This strategy will profit if the pair moves down, sideways, or even slightly up, as long as it stays below that key resistance.
We have seen this pattern before in the USD/CHF pair. A similar setup occurred in the fourth quarter of 2023, where a sharp rally led to an overbought RSI reading, followed by a significant multi-week correction of over 4%. History suggests that once momentum shifts after such a strong run, the pullback can be swift and deep.
