The USDCHF currency pair has been rising, driven by favorable U.S. economic data, such as jobless claims, the Philly Fed survey, and retail sales. The pair broke through a key swing area between 0.80388 and 0.8055, which has acted as both support and resistance in the past. However, despite this upward movement, there has been some selling pressure, pulling the price back into the yellow swing zone. To keep their momentum, buyers need to keep the price above the 0.80388–0.8055 range.

Future Buyer Goals

Buyers aiming to maintain control should focus on two future targets: the 200-bar moving average on the 4-hour chart at 0.80719, and the 38.2% retracement level from the decline between April and June at 0.8102. If the price can’t stay above the swing area, it may retrace further. Currently, buyers are working to stabilize the price for potential additional gains. This recent movement seems supported fundamentally by a widening gap between central bank policies. The Swiss National Bank unexpectedly cut interest rates on June 20th, marking its second cut this year, while the Federal Reserve has hinted that it may only reduce rates once in 2024. This difference makes the U.S. dollar more appealing compared to the Swiss franc.

U.S. Economic Data

The underlying U.S. economic data backs this viewpoint, even if some signals are mixed. For instance, May’s retail sales were lower than expected, but weekly jobless claims stayed low at 238,000. This suggests a strong labor market, making it unlikely for the Fed to cut rates soon. This reinforces the dollar’s strength for the near future. Given this perspective, we recommend that derivative traders think about buying call options, aiming for movement towards the 0.8102 level. This strategy provides a way to take advantage of the bullish momentum if the pair stays above the critical swing area. The clear upside targets also offer specific strike prices for these options. That said, the recent rejection from the highs suggests caution is necessary. If the pair fails to hold support, traders should be ready to hedge or switch their positions by buying puts. A significant drop below 0.80388 would challenge the current bullish outlook and hint at a possible return to earlier lows. Create your live VT Markets account and start trading now.

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