The USDCHF pair has seen fluctuations around critical moving averages following recent economic developments. Initially, the pair gained momentum, trading above the 200-hour moving average at 0.8001, which correlated with a decline in the EURUSD after the ECB policy announcement.

However, a surprising increase in U.S. jobless claims to 263K, much higher than the anticipated 235K, shifted the momentum downward. Consequently, the USDCHF fell back to the 100-hour moving average at 0.7967. Buyers attempted to support the pair at this level, resulting in a minor rebound to around 0.7973.

Short Term Outlook

The pair’s short-term outlook now shows a slight downward bias, particularly after failing to hold above the 200-hour moving average and slipping under a key retracement level. The 100-hour moving average of 0.7967 remains a critical level for buyers trying to prevent further declines.

On the policy front, the Swiss National Bank shows caution regarding further rate cuts, with interest rates currently at zero. Meanwhile, the Federal Reserve is anticipated to start a rate-cutting cycle in September. These factors, along with technical levels, continue to influence the pair’s movement.

The recent spike in US initial jobless claims to 263,000 is a significant signal for us. This isn’t just a one-off number; it pushes the four-week moving average to its highest level this year, suggesting a clear weakening in the US labor market. This data reinforces the view that the US economy is losing momentum heading into the final quarter of 2025.

With this weakening data, we see the market now pricing in an 85% probability of a Federal Reserve rate cut at next week’s meeting. This expected start to an easing cycle is fundamentally bearish for the US dollar. The path of least resistance for the dollar appears to be downwards against currencies with less dovish central banks.

Technical Picture

On the other side of the pair, the Swiss National Bank seems reluctant to ease policy further, having already cut rates to zero earlier this year. This policy divergence, where the Fed is starting to cut while the SNB holds steady, should continue to favor the Swiss franc. The narrowing interest rate differential makes holding dollars less attractive than holding francs.

The technical picture is now catching up to these fundamentals, with the USDCHF failing to hold above the 200-hour moving average. We are now watching the 100-hour MA at 0.7967 as the critical short-term level. A sustained break below this support would confirm that sellers are in control and open the door for a much deeper move lower.

For derivative traders, this setup suggests looking at bearish strategies in the coming weeks. Buying put options on USDCHF could be a straightforward way to position for a drop below the key 0.7967 level. We might also consider put spreads to define risk, especially with volatility likely to pick up around the upcoming Fed decision.

This situation reminds us of similar periods, like in late 2023, when expectations of a Fed policy pivot led to sustained dollar weakness. History suggests that once a Fed easing cycle begins against a backdrop of slowing growth, the trend can persist for several months. Therefore, any small bounces in the pair could be seen as opportunities to initiate or add to bearish positions.

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