The USD/CHF pair has risen to about 0.7915, despite a bearish outlook due to expected interest rate cuts by the Fed. The pair climbed from a three-month low of 0.7860, even though the Federal Reserve is predicted to lower rates by at least 50 basis points in 2026. According to the CME FedWatch tool, there is a 73.3% chance this rate cut will occur. The Fed predicts the Federal Funds Rate will hit 3.4% by the end of 2026. Leadership changes at the Fed may also push for a more aggressive easing policy in 2026.

Swiss Franc Movement

At the start of the week, the Swiss Franc has slightly decreased. The USD/CHF pair trades higher near 0.7915, close to its low of 0.7830 from three months ago. The 20-day Exponential Moving Average (EMA) at 0.7966 is providing resistance, making it hard for prices to rebound. The 14-day Relative Strength Index (RSI) is at 31, indicating weak momentum. If prices stay under the 20-day EMA, bearish momentum will continue. A close below the September 17 low of 0.7830 could add more pressure to the downside. The current rise in USD/CHF toward 0.7900 appears to be a small correction within a larger downtrend. The Fed’s dovish approach is the main influence, with strong expectations for significant rate cuts in 2026. This situation makes it difficult to be optimistic about the US Dollar compared to the Swiss Franc. The Fed’s stance is supported by the latest US Personal Consumption Expenditures (PCE) data from November 2025, showing an annual rate of 2.6%, which is comfortably within range. This data backs the market’s belief in over a 70% chance of at least 50 basis points in cuts next year. Meanwhile, the Swiss National Bank, one of the first central banks to cut rates back in 2024, now faces less pressure to ease aggressively.

Derivatives Trading Strategies

For those trading derivatives, this suggests strategies that profit from a falling or stable USD/CHF price. Consider buying put options or setting up bear call spreads, using the 20-day EMA around 0.7966 as a key resistance level for your strike prices. The low trading volume typical of the year’s end might offer good premiums, but be wary of sudden price shifts. A consistent break below the September 2025 low of 0.7830 would confirm the bearish trend and could lead to further declines. While the RSI is close to oversold at 31, hinting at possible short-term bounce opportunities, any strength is likely just a chance to sell as long as we stay below that key average. This weak momentum strengthens our bearish outlook as we enter the first weeks of 2026. Create your live VT Markets account and start trading now.

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