UPDATE: The USD/CHF pair has just surged following positive remarks from President Donald Trump regarding China, as market sentiment shifts dramatically. This rebound comes amid ongoing economic uncertainty, including a significant government shutdown affecting key US data releases.
The dollar showed signs of strength on Friday as US Treasury yields bounced back, erasing losses from the previous day. With markets reacting swiftly to Trump’s comments, investors are left pondering whether this is a temporary pullback or a more significant reversal for the USD/CHF.
Currently, the US dollar’s performance remains mixed, heavily influenced by rapid changes in risk sentiment since Trump’s threats of tariffs. The ongoing government shutdown continues to delay crucial economic reports, raising concerns about the dollar’s stability. Analysts warn that the “repricing trade” for the dollar hinges on strong US data, particularly from the Bureau of Labor Statistics (BLS), which is set to release the Consumer Price Index (CPI) report today despite the shutdown.
Expectations for the CPI report are high, but they could be overshadowed by developments in US-China relations. Should negative news emerge from these discussions, the CPI report may not significantly impact market sentiment, as growth fears could take precedence over inflation data.
On the Swiss franc side, the Swiss National Bank (SNB) maintained its interest rates during the last meeting, offering no new guidance. President Thomas J. Schlegel emphasized that the threshold for further rate cuts remains high, noting that short-term negative inflation figures won’t suffice for action.
Despite a slight rebound in recent Swiss inflation prints, analysts indicate a long road ahead before breaching the SNB’s target of 2% inflation. This positions the CHF predominantly under the influence of global risk sentiment.
Chart analysis reveals that USD/CHF broke below a significant upward trendline last week, dropping to around 0.7872 before a slight recovery following Trump’s comments. If the price rolls over again, buyers are likely to step in at 0.7872, setting a defined risk below that level while targeting a rally towards 0.8073.
Sellers, conversely, will be eager to see the price break lower, intensifying bearish bets for new lows. On the four-hour chart, a downward trendline indicates ongoing bearish momentum, with current trading slightly above this line. Sellers are expected to act with defined risks above the trendline, anticipating further declines.
On the one-hour chart, the price action shows significant resistance around 0.7935. Sellers will likely continue to press below this level, while buyers aim for a breakout to boost bullish positions.
The focus today remains on the developments in US-China relations, alongside the highly anticipated US CPI report and flash PMIs. As these events unfold, traders are closely monitoring market reactions that could dictate the next moves for both USD and CHF.
As we follow these critical updates, the volatility in the currency markets is expected to continue, making this a pivotal moment for investors and traders alike.
