- USD/CHF is holding firm near 0.7940 as the US dollar stabilises after a recent pullback
- The US Dollar Index remains supported above 98.20 while markets await fresh macro direction
- Attention is turning to upcoming US labour data, with downside risks starting to dominate expectations
- Technically, USD/CHF remains compressed within a symmetrical triangle, pointing to a volatility breakout
During European trading hours, the USD/CHF pair edged higher toward the 0.7940 area, extending a modest recovery that began after the US dollar found a short-term base earlier this week. While the Swiss franc has remained broadly steady, renewed dollar demand has helped the pair stay supported above key intraday levels.
The US Dollar Index is currently hovering just above 98.20, still some distance from its recent three-week peak near 98.86. Early-week support came from geopolitical headlines, but that impulse has faded, leaving the dollar increasingly dependent on incoming economic data rather than risk-driven flows.
On the macro front, US data continues to send mixed signals. The latest ISM Manufacturing PMI slipped further into contraction at 47.9, reinforcing concerns that industrial activity remains under pressure. This has encouraged traders to stay cautious and wait for clearer confirmation from the labour market before committing to a stronger directional bias.
US Jobs Data Back in Focus
The next major catalyst for the dollar will be the US Nonfarm Payrolls report. Current expectations point to job growth of around 55,000, down from the previous reading of 64,000. While the unemployment rate is forecast to tick slightly lower to 4.5 percent, the balance of risks appears skewed to the downside.
That caution follows a weak ADP Employment Change report, which unexpectedly showed a loss of 32,000 jobs, well below market forecasts. In addition, the upcoming ISM Services PMI is expected to ease to around 52.2, suggesting that momentum in the broader economy may be cooling.
Together, these releases will be closely watched by traders assessing the Federal Reserve’s policy outlook for the year ahead, particularly as signs of labour market softness begin to accumulate.
Swiss Franc Awaits Inflation Clarity
In Switzerland, attention is turning to the upcoming CPI release, with headline inflation expected to remain flat at 0.0 percent year on year. Persistently low inflation keeps the Swiss National Bank in a wait-and-see stance, offering little incentive for near-term policy tightening. This backdrop leaves the franc largely neutral and reactive to external drivers, particularly movements in the US dollar.
USD/CHF Technical Outlook
The latest 4-hour chart shows USD/CHF continuing to coil within a well-defined symmetrical triangle, with price consolidating around the 0.7920–0.7930 region. The structure remains intact, defined by a rising support line from the late-December lows and a descending trendline drawn from early-December highs.
On the downside, the 0.7905–0.7885 area continues to act as a key demand zone. This region has repeatedly attracted buyers and aligns closely with ascending trendline support, reinforcing its importance in the current structure. A sustained break below 0.7880 would invalidate the bullish setup and shift focus toward the 0.7860 level.
On the upside, initial resistance is located between 0.7950 and 0.7965, where the descending trendline has capped recent advances. A confirmed breakout above this zone would signal a resolution of the triangle and open the path toward 0.7985, followed by a potential test of the 0.8000 psychological level.
Momentum indicators remain broadly neutral. The MACD is flattening after a recent advance, reflecting consolidation rather than a shift to bearish momentum.
This suggests USD/CHF is pausing ahead of a macro catalyst, with US labour market data likely to determine the next directional move. As long as price holds above the rising trendline, the technical bias continues to favour upside continuation following a confirmed breakout.
Writer’s Trade Idea: My preferred strategy remains buying pullbacks toward 0.7910, targeting 0.7985, while placing a stop-loss below 0.7880.
USD/CHF is primarily driven by US economic data, Federal Reserve policy expectations, and shifts in global risk sentiment. Strong US data or rising US yields typically support the dollar, while periods of market uncertainty tend to strengthen the Swiss franc due to its safe-haven status.
USD/CHF reflects the balance between two safe-haven currencies. The Swiss franc benefits during global risk-off periods, while the US dollar gains support from its reserve currency status and yield advantage. As a result, the pair often reacts sharply to geopolitical events and changes in risk appetite.
In the short term, USD/CHF often respects technical levels such as trendlines and chart patterns. However, medium- to long-term direction is largely driven by fundamentals, particularly US labour data, inflation trends, and interest rate expectations from the Federal Reserve and the Swiss National Bank.