The USDCHF pair experienced a decline after a weaker-than-expected NFP report, prompting a swift market repricing. Initially, expectations included a 60 bps easing by year-end, compared to 35 bps before the report. Fed officials have hinted at a possible September cut, with more benign data potentially influencing Fed Chair Powell’s decision at the Jackson Hole Symposium. The ISM Services PMI showed increased prices, causing caution ahead of next week’s US CPI.

Swiss Monetary Policy

Swiss monetary policy remains unchanged, with the SNB in a long pause and no rate hikes expected. Recent Swiss CPI showed slight inflation improvement, and the market does not foresee SNB rate cuts. US tariffs on Switzerland, initially set at 35%, are expected to resolve at 10-20%, similar to other countries.

On the daily chart, USDCHF trades above a key resistance zone with potential support for a rally to 0.83. Sellers aim for a breakdown towards 0.79. On the 4-hour chart, price recoiled from a minor trendline post-NFP, with buyers seeking new highs and sellers aiming for lower lows. The 1-hour chart shows a similar outlook, with buyers eyeing 0.83 and sellers preparing for declines.

The upcoming US Jobless Claims figures could impact market perceptions of labour market strength.

We saw the dollar sell off after a softer jobs report, but this reaction might have been overdone. Looking closer, U.S. jobless claims have remained stubbornly low, with last week’s initial claims at just 218,000, suggesting the labor market is tighter than one report indicates. This strength is creating uncertainty about the Federal Reserve’s next steps.

Rate Cuts Context

The market has been quick to price in more rate cuts, but we need to remember the context from earlier this year. The Fed only started cutting rates in March 2025, after inflation proved unexpectedly sticky throughout the second half of 2024. With the latest July CPI data showing core inflation still elevated at 3.6%, the path for further aggressive cuts is not guaranteed.

On the Swiss side, things are much quieter, which has provided some underlying strength to the franc. The Swiss National Bank has been on hold for nearly a year, and with domestic inflation running at a comfortable 1.5%, they feel no pressure to change policy. The major trade tariff issue with the United States was also settled at 15% late last year, removing a key headwind for the franc.

Given these conflicting fundamental drivers, derivative traders should prepare for potential volatility rather than betting on a clear direction. With USD/CHF trading between major technical levels, options strategies like buying straddles or strangles could be effective. This would allow traders to profit from a significant price swing, either up or down, which could be triggered by next week’s CPI release.

In the immediate weeks ahead, all eyes will remain on U.S. data, particularly inflation and employment figures. The Fed’s tone at the upcoming Jackson Hole Symposium will be critical in shaping expectations for the rest of the year. We are essentially in a holding pattern, waiting to see if persistent inflation or a weakening labor market will ultimately dictate policy.

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