The USDCHF pair remains in a range following a selloff, with traders anticipating the US CPI release for direction. Since the NFP report, the USD has weakened as market expectations shift towards easing, with 57 basis points of rate cuts priced by year-end, up from 35 basis points previously.
US CPI Focus
Attention is focused on the upcoming US CPI report, as recent Fedspeak indicates a rate cut may occur in September. For USDCHF, technical analysis shows trading above the key support zone around 0.8050 on the daily chart, with buyers eyeing the 0.84 handle and sellers anticipating a drop to new cycle lows.
In the shorter 4-hour timeframe, a minor upward trendline supports the bullish structure, with significant focus on the support zone. On the 1-hour chart, minor support at 0.8090 suggests buyer interest for a rally towards 0.84, while sellers aim for a break below to extend a pullback.
The US CPI report today could overshadow technicals. Upcoming catalysts include US PPI and Jobless Claims on Thursday, and Retail Sales and Consumer Sentiment on Friday. Monitoring Fedspeak, especially post-CPI, is advised for further insights.
With the dollar weakening since the July 2025 Non-Farm Payrolls report came in soft at 150k, we are watching USDCHF hover just above key support. The market has now aggressively priced in two Federal Reserve rate cuts before the end of the year. This anticipation has pinned the pair in a tight range as everyone awaits today’s US Consumer Price Index (CPI) data for direction.
Our focus is squarely on the upcoming CPI release for July 2025, which will be pivotal for the Fed’s decision-making. Given that core inflation has been trending down from the 3.4% we saw earlier in the year, another soft print below the expected 3.0% would likely solidify a September rate cut. In this scenario, we would consider buying USDCHF put options with a strike price below the major 0.8050 support level to target new lows.
Possible Trading Strategies
On the other hand, if inflation data comes in surprisingly hot, it could challenge the market’s dovish assumptions and trigger a sharp dollar rally. Traders might then look at selling cash-secured puts at the 0.8050 support or buying call options targeting the 0.8400 handle. This strategy banks on the idea that the strong technical support will hold during a dollar rebound.
The Swiss National Bank remains on the sidelines after pausing its easing cycle for much of 2025, leaving its policy rate at 1.00%. This policy stability makes the Swiss franc’s movement highly dependent on the dollar’s next move. Political noise, such as the ongoing US tariff discussions, adds a layer of risk but is a secondary driver for now.
Given the uncertainty, an options straddle, buying both a call and a put option with a September 2025 expiry, could be a prudent way to trade the expected volatility from the CPI release. Implied volatility on USDCHF options has climbed in recent days, reflecting the market’s anticipation of a significant price swing. This strategy allows profiting from a large move, regardless of the direction.
Looking past today’s CPI, we will be watching Thursday’s Producer Price Index and jobless claims data closely. These subsequent reports, along with Friday’s retail sales figures, will be critical in confirming the inflation narrative. Any deviation from the trend could provide fresh opportunities in the derivatives market.
