Insights 
VT 
The USD/CHF pair remains subdued under 0.8000, aiming for over 0.25% gains by week’s end. It is trading at 0.7956, nearly unchanged.
Traders encounter resistance at the 20 and 50-day SMAs, between 0.7974 and 0.7984. A bearish momentum is indicated by the RSI below the 50 neutral level.
Continuing The Bearish Trend
To continue the bearish trend, traders need to pass the 0.7873 October 17 low, with 0.7829 being the next support. If USD/CHF surpasses 0.8000, the 100-day SMA at 0.8022 and the October 8 high at 0.8076 are key resistances.
The Swiss Franc (CHF) is one of the top ten traded currencies. Its value is influenced by global market sentiment, the Swiss economy, or the Swiss National Bank’s actions.
CHF is a safe-haven currency, strengthened in turbulent times due to Switzerland’s stable status. The Swiss National Bank meets quarterly, targeting inflation below 2%.
Interest rates affect CHF value; higher rates boost CHF as they attract investments. Economic data influencing CHF includes growth, inflation, and central bank reserves.
Correlation With The Eurozone
Switzerland’s economy heavily relies on the Eurozone. Thus, CHF and EUR are closely correlated, with some models suggesting over 90% correlation.
We see the USD/CHF pair consolidating below the 0.8000 mark, struggling with resistance from the 20 and 50-day moving averages. This technical standoff is happening as we digest recent inflation data from both the US and Switzerland, which points to a widening policy gap between the two central banks. US Core PCE inflation, released last week, showed a stubborn rise to 2.8% year-over-year, while Swiss inflation remains muted at just 1.4%, well below the Swiss National Bank’s (SNB) target.
For traders anticipating a move higher, a break above the 0.7984 level could be a trigger to consider buying call options. Such a move would suggest the market is favoring the Federal Reserve’s “higher-for-longer” interest rate narrative over the SNB’s more dovish stance. The first major target would be the psychological 0.8000 level, followed by the 100-day moving average near 0.8022.
On the other hand, if risk aversion suddenly spikes in global markets, the franc’s safe-haven status could come back into play. A break below the October 17 low of 0.7873 would be a key bearish signal, potentially making put options attractive for a move toward the yearly low of 0.7829. We only have to look back to the turmoil in early 2023 when banking sector stress caused a flight to the franc, showing how quickly sentiment can shift.
We must also watch the Eurozone, as the franc remains highly correlated with the euro. Recent weak manufacturing PMI data from Germany suggests a deepening economic slowdown in the region, which could weigh on the franc and support a higher USD/CHF. Given the conflicting economic signals, using options to trade volatility, such as a straddle, could be a sensible strategy for navigating the uncertainty in the weeks ahead.
