CHF

• Softer US inflation and flat wholesale prices weigh on the US Dollar.
• Federal Reserve rate hike expectations for September drop to nearly 35%.
• Swiss inflation cools to 0.4%, though SNB rate hikes remain priced in long-term.

USD/CHF halts its four-day winning streak, trading around 0.8140 during the Asian hours on Friday. The currency pair edges lower as the US Dollar (USD) faces downward pressure following a softer-than-expected US inflation report.

Market attention is now turning toward the upcoming US July Retail Sales data scheduled for release later in the day. Adding to the broader inflation picture, the Bureau of Labor Statistics reported that US wholesale costs for goods and services were flat in July, cooling more than the anticipated 0.2% growth, after a revised 0.1% decline in June. Excluding volatile food and energy components, the core Producer Price Index (PPI) rose 0.2%, coming in slightly below market consensus expectations of 0.3%. On an annual basis, headline PPI climbed 4.7% year-over-year in July, while core PPI increased by 4.2% over the same period.

These cooling inflation metrics have shifted expectations regarding Federal Reserve policy. According to the CME FedWatch Tool, markets are now pricing in a 34.8% probability of a U.S. rate hike at the upcoming September meeting, down from 40% immediately following the PPI data release.

Meanwhile, inflation pressures in Switzerland have also eased. Swiss inflation dropped to 0.4% in July from 0.5%, its lowest level in four months, highlighting the limited pass-through from higher energy prices linked to geopolitical tensions. This lower reading contrasts with the Swiss National Bank’s (SNB) expectation of a modest near-term pickup in inflation, which followed its recent decision to hold its policy rate at 0%.

The SNB is widely expected to leave borrowing costs unchanged throughout the year, treating further cuts as a contingency rather than the baseline scenario, given that Swiss banks have suffered no severe damage. While most economists do not foresee the first SNB rate hike until early 2028, currency markets continue to price in an increase as early as March 2027.

Franc softness seen persisting as SNB keeps inflation risks in check

Analysts at OCBC note that “near-term inflation risks remain limited,” even as the recent depreciation of the Swiss Franc could eventually feed through via higher imported prices. They judge that any such impact “is unlikely to be felt for at least another two quarters,” and stress that domestic price pressures “remain subdued and below the midpoint of the SNB’s 0-2% price stability range,” reinforcing expectations that the SNB can afford to stay patient on policy and tolerate further Franc weakness.

• USD/CHF attracts buyers for the fourth straight day on Thursday amid a broadly firmer USD.
• Inflation risks amid volatile oil prices keep Fed hike bets on the table and underpin the buck.
• Traders now look to the US PPI and Weekly Jobless Claims data for short-term opportunities.

The USD/CHF pair prolongs the weekly uptrend for the fourth consecutive day and climbs to a two-week high, around 0.8045, during the Asian session on Thursday amid a firmer US Dollar (USD). Moreover, the fundamental backdrop favors bulls and backs the case for further appreciation for spot prices.

The initial market reaction to the in-line US Consumer Price Index (CPI) report, released on Wednesday, fades rather quickly amid concerns about inflation risks stemming from volatile oil prices and the US-Iran standoff. President Donald Trump again claimed that the US has total control over the Strait of Hormuz, while Iran has pledged to keep the vital waterway closed until all its demands are met. Moreover, Iran-backed Houthis in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, increasing war-risk premiums, which continue to support crude oil prices.

Analysts at HSBC highlight that “uncertainties over the path to a resolution of the Middle East conflict have caused the oil price to move in a volatile manner in recent weeks – firstly back up to USD100/b, then back below USD80/b – the difference having quite a sizeable impact on the global economic outlook.” Against this backdrop, the bank cautions that “headline inflation risks, therefore, remain acute: beyond oil and gas, other commodity prices remain elevated,” underscoring the persistence of price pressures even as energy markets swing sharply.

Investors seem convinced that higher energy prices will rekindle inflationary pressures and force the US Federal Reserve (Fed) to stick to its hawkish stance. According to the CME Group’s FedWatch Tool, traders are currently pricing in a nearly 80% chance that the US central bank will raise borrowing costs at least once by the end of this year. This, along with persistent geopolitical uncertainties, helps the safe-haven USD build on the previous day’s goodish rebound from the post-CPI swing low and climb to a one-week high, which, in turn, is seen as acting as a tailwind for the USD/CHF pair.

Market participants now look to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data. This, along with speeches from influential FOMC members, would drive USD demand and provide some impetus later during the North American session. Apart from this, the incoming geopolitical headlines should produce short-term trading opportunities around the USD/CHF pair. Nevertheless, the aforementioned supporting factors suggest that the path of least resistance for spot prices remains to the upside.

• USD/CHF rises as the US Dollar erases losses following an oil rally driven by geopolitical tensions.
• Rising energy prices and Treasury yields stoked fears of early Fed rate hikes despite a cooling labor market.
• Swiss inflation unexpectedly dropped to a four-month low of 0.4% in July, defying Swiss National Bank expectations.

USD/CHF extends its gains for the second successive day, trading around 0.8110 during the early European hours on Tuesday. The currency pair has pushed higher as the US Dollar (USD) erased its intraday losses, fueled by a sharp rally in crude oil driven by heightened geopolitical tensions.

This surge in energy prices has dragged Treasury yields upward, stoking market fears that the Federal Reserve (Fed) might be forced to hike interest rates sooner than expected, even as the labor market continues to cool. Consequently, investors are sharply focused on this week’s inflation metrics for clearer policy signals, with the CME FedWatch Tool now pricing in nearly 52% probability of a 25-basis-point rate hike in September, up from 44.4% just a day ago.

USD seen rangebound as Fed hike bar stays high and oil gains capped

Analysts at OCBC argue that the inflation hurdle for a September Fed move remains significant, noting that “core CPI would need to print at 0.3% MoM or higher in July, above the 0.2% consensus forecast, to materially lift expectations of a September rate hike.” In their view, a “range-bound USD, combined with a constructive risk backdrop, should continue to support carry trades despite ongoing volatility in oil markets.” They add that recent “oil prices eased on hopes that the Strait of Hormuz could reopen, but Iran’s firm conditions for Washington suggest any near-term boost to energy supply is likely to be limited,” tempering expectations for a sustained pullback in energy prices.

Adding to the hawkish momentum, Cleveland Fed President Beth Hammack emphasized that the central bank will likely need to execute multiple rate hikes to get broad-based inflation under control. Speaking with Yahoo Finance, Hammack, who notably dissented at the July meeting in favor of an immediate hike, argued that current policy remains insufficiently restrictive. She highlighted the upcoming Consumer Price Index report as a pivotal test that will dictate the Fed’s trajectory moving forward.

In contrast, Swiss inflation cooled to a four-month low of 0.4% year-over-year in July, falling from 0.5% in the previous month and showing remarkably little pass-through from global energy price shocks. The unexpected drop defied the Swiss National Bank’s expectations for a minor inflationary uptick after holding its policy rate at 0%. Bolstered by a resilient banking sector, the SNB is widely expected to keep rates on hold through the end of the year, treating additional rate cuts as a fallback option rather than the primary path.

• USD/CHF trades with a negative bias for the second straight day, though it lacks bearish conviction.
• The disappointing US NFP tempered Fed-hike bets, undermining the USD and weighing on the pair.
• The technical setup seems tilted in favor of bearish traders and backs the case for a further decline.

The USD/CHF pair struggles to attract any meaningful buyers and remains on the back foot below the 0.8100 mark through the first half of the European session on Monday.

Friday’s disappointing US Nonfarm Payrolls (NFP) further tempered bets of an immediate interest rate hike by the US Federal Reserve (Fed), which, in turn, is seen undermining the US Dollar (USD) and capping the USD/CHF pair. Investors, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from energy supply disruptions.

Apart from this, persistent geopolitical uncertainties might hold back traders from placing aggressive bearish bets on the safe-haven USD and contribute to limiting losses for the USD/CHF pair. The market focus now shifts to the release of the US inflation figures, due this week. The crucial data will be looked for fresh cues about the Fed’s future policy path, which, in turn, will play a key role in influencing the USD demand.

From a technical perspective, the USD/CHF pair is holding below the 23.6% Fibonacci retracement level of the May-July rally, albeit bears await a break below the 50-day Simple Moving Average (SMA) before placing fresh bets. Meanwhile, the Relative Strength Index (RSI) hovers just below the 50 line and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting upside momentum is tentative.

Hence, a break below the 50-day SMA will be seen as a key trigger for USD/CHF bears and pave the way for a decline to a dense Fibo. support band between the 38.2% retracement at 0.8037 and the 61.8% level at 0.7932 ahead of structural floors at 0.7857 and 0.7761. On the topside, initial resistance comes at the 23.6% Fibo. retracement at 0.8103, and a break above this barrier would expose the next upside objective at the cycle high zone around 0.8208.

USD/CHF daily chart

• USD/CHF regains positive traction and snaps a two-day losing streak amid a modest USD uptick.
• The formation of an ascending channel favors bulls and backs the case for further appreciation.
• Corrective pullbacks could be bought into and remain limited near the trend-channel support.

The USD/CHF pair attracts some buyers near the 0.8060 region on Thursday amid a modest US Dollar (USD) uptick. Spot prices, for now, seem to have snapped a two-day losing streak and trade around the 0.8080-0.8085 region during the first half of the European session, up nearly 0.15% for the day.

From a technical perspective, the move up along an upward-sloping channel points to a well-established bullish trend. Adding to this, the recent breakout above the 0.8000 psychological mark supports prospects for a further near-term appreciation of the USD/CHF pair. Meanwhile, the Relative Strength Index (14) sits near a neutral 48.7, hinting at balanced momentum.

Moreover, the Moving Average Convergence Divergence (MACD) remains slightly negative, which only mildly tempers the constructive tone. Nevertheless, the setup suggests room for further gains before encountering a more significant cap. The USD/CHF pair is placed closer to the middle of the structure, with overhead supply defined by the channel top at 0.8219,

A daily close above this level would signal an acceleration of the uptrend and open the way to fresh highs within the broader bullish channel environment. On the downside, initial demand is located at the channel bottom around 0.7936, where a break would expose deeper support at the prior structural base near 0.7692 and would weaken the current bullish narrative.

USD/CHF daily chart