• USD/CHF depreciates as the US Dollar declines due to the Democratic midterm sweep and falling oil prices.
• Strong ADP hiring numbers and steady ISM service growth continue to support Fed rate hike expectations.
• October’s unexpected 1.5% Swiss inflation rise fuels doubts that the SNB can avoid raising interest rates through 2027.

USD/CHF extends its losses for the second consecutive day, trading around 0.8140 during Asian hours on Thursday. The pair depreciates as the US Dollar declines following a Democratic sweep in the US midterm elections, which handed Democrats control of both houses of Congress and raised concerns over potential political gridlock in Washington. Additionally, market expectations of a swift end to the Middle East conflict triggered a sharp decline in oil prices, putting further downward pressure on the Greenback.

However, the Greenback may gain support as resilient domestic economic data reinforced expectations for a Federal Reserve rate hike. The ADP employment report showed private-sector hiring increased by 86,000 in October, beating expectations of 69,000, despite September’s figure being revised down to 86,000 from 90,000. Meanwhile, the ISM Services PMI slipped slightly to 54.5 from 54.9, just below the 54.8 forecast, but remained firmly in expansion territory.

The CME FedWatch Tool indicates that markets are pricing in nearly an 82% chance of another rate hike in December. Investors are now awaiting key upcoming economic indicators, including weekly US Initial Jobless Claims on Thursday and the Nonfarm Payrolls (NFP) report on Friday.

The Swiss Franc (CHF) receives support against its major peers as Swiss inflation unexpectedly rose to 1.5% year-on-year in October, raising doubts over whether the Swiss National Bank (SNB) can avoid tightening policy through 2027.

USD/CHF bears need a clean break of 0.8140, says UOB

Strategists at UOB Group maintain a cautiously negative bias on USD/CHF over the 1–3 week horizon, but stress that further downside now hinges on a decisive break of key support. They recall that they “revised our view to slightly negative last Friday (30 Oct, spot at 0.8240), highlighting that USD ‘could edge lower, but any decline should stay within a 0.8190/0.8290 range.’” However, after USD “broke clearly below 0.8190,” UOB noted yesterday that “downward momentum is increasing rapidly, and USD could decline to 0.8165, potentially testing 0.8140.” The pair subsequently “dropped to 0.8148 before rebounding strongly,” and with that rebound, the bank judges that “downward momentum has slowed.” From here, UOB argues that “USD must break and hold below 0.8140 before further declines can be expected,” with “the next level to watch below 0.8140” at “0.8110.” On the topside, they add that “a break above 0.8220 (‘strong resistance’ level was at 0.8255 yesterday) would mean that USD is not declining further.”