The USDCHF tried to decline on Wednesday and again earlier today, but neither attempt was successful. Sellers couldn’t keep the price below 0.7919, leading to a bounce back to a range of 0.7938 to 0.7947. After stabilizing in this range, the price hit 0.7938 before climbing higher in the early US session. However, it now faces resistance from significant technical levels, with the next target being the 100-hour moving average at 0.7963.

Key Moving Averages

If the USDCHF breaks through this level, the next target is the 200-hour moving average at 0.79855. These moving averages, along with a previously broken trendline that is now resistance, create a significant barrier for buyers seeking short-term control. Surpassing these levels would change the short-term direction upwards, targeting the area around 0.8017 and reaching last week’s highs up to 0.80628. If the price remains below these averages, sellers keep some influence, and traders may revisit the range between 0.7938 and 0.7947. Currently, we view the price activity as a short-term consolidation in a broader uptrend. The main factor driving this trend is the difference in monetary policy between the U.S. Federal Reserve and the Swiss National Bank. This difference strongly supports a stronger dollar against the franc in the medium term.

Interest Rate Factors

In June 2024, the Swiss National Bank surprised many by lowering its key interest rate to 1.25%, indicating a clear easing approach. This is in contrast to the latest U.S. inflation data, which, although slightly lower in May, has kept Federal Reserve officials cautious about reducing rates too quickly. This increasing difference in interest rates encourages capital to move toward the higher-yielding currency. For traders who believe the uptrend will continue, buying call options with strike prices just above the 200-hour moving average makes sense. Setting a target around 0.8017 provides a defined-risk way to profit from a potential breakout. This strategy assumes that the recent dip is just a temporary pullback rather than a trend reversal. If the moving averages continue to present strong resistance in the near term, traders may want to sell cash-secured puts with a strike price near the 0.7938 swing area. This approach generates premium income and prepares for a possible long position at a better price if the pair dips. This aligns with the perspective that sellers remain in control until those key levels are broken. Historically, lasting trends in this currency pair have been influenced by central bank policies. The strong uptrend throughout most of 2024 reflects the SNB’s dovish stance while the Fed has remained steadfast. Therefore, we should view the ongoing struggle at the moving averages as a crucial test to determine if this prevailing trend will continue in the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now