The USDCHF started the week strong, hitting a peak on Monday in the swing range of 0.8017 to 0.8023. However, after dropping below the 200-hour moving average at 0.79836, the pair stayed under this level for the rest of the week. If it rises above this average, we might see a short-term bullish trend.

Midweek Market Movement

During the middle of the week, sellers pushed the pair down, with lows reaching below 0.79197 on Wednesday and Thursday. Despite this drop, momentum slowed, and the price bounced back by the end of the trading day, although it remained below the 100-hour moving average. Today, buyers came back, supporting the price at 0.79471, keeping the pair between the 100-hour and 200-hour moving averages. As we head into the new trading week, attention will be on the 100-hour moving average at 0.79490 and the 200-hour moving average at 0.79836. These levels will shape market sentiment. If the price goes above the 200-hour moving average, it could suggest bullish potential. Conversely, staying below the 100-hour moving average may point to a bearish outlook. Key resistance levels are at 0.79836 and 0.8017–0.8023, while support can be found at 0.79496 and lower swings around 0.7938 to 0.7947 and 0.79197. According to Michalowski’s analysis, the USDCHF is currently indecisive, mirroring a broader conflict between central bank policies. The US Federal Reserve is maintaining high rates, while the Swiss National Bank has started cutting rates since March, becoming the first major central bank to do so. This tug-of-war is keeping the price pinned between the key moving averages.

Potential Trading Strategies

We should look for a catalyst. Recent US inflation data for May was slightly lower than expected at 3.3%, raising speculation that the Fed might cut rates by September. This adds weight to the resistance at the 200-hour moving average, making it a strong barrier for now. Thus, selling call options or buying short-term puts near the 0.79836 level could be a smart strategy until a clear breakout occurs. On the other hand, Switzerland’s inflation remains low at 1.4%, giving its central bank reasons to cut rates again at its next meeting in late June. This offers robust support for USDCHF, explaining why sellers couldn’t push below 0.79197 last week. This historical support suggests that buying call options or selling puts on any dip toward the 100-hour moving average might be profitable. Given the tight consolidation, a volatility-based strategy seems best for the upcoming weeks. We can set up a long strangle by purchasing both an out-of-the-money call option above the 200-hour MA and an out-of-the-money put option below the 100-hour MA. This position will gain from a significant price movement in either direction, which seems likely once the Fed or SNB provides clearer direction. Create your live VT Markets account and start trading now.

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