USD/CHF fell nearly 0.5% to around 0.7930 in European trading on Monday, while the daily chart kept the pair within an ascending channel. Price action slipped below 0.7950 and remained capped by the nine-day EMA, pointing to near-term consolidation even as it stayed above the 50-day EMA. Momentum indicators were mixed: the 14-day RSI was described around 54 in one reading, while another placed it near 60, both levels still consistent with positive territory rather than overbought conditions.
Levels in focus cluster tightly around the moving averages and channel boundaries. A rebound could target the nine-day EMA at 0.7942, and if strength persists the next tests are the six-month high of 0.8042 from March 31 and then the channel top near 0.8060; beyond that, a break would open the way to a near-yearly high of 0.8171 set in August 2025. On the downside, support sits near 0.7920 at the channel base, then the 50-day EMA at 0.7881; below it, attention turns to the three-month low of 0.7761 from May 8.
Technical Overview and Upside Strategy
We are observing the USD/CHF pair showing underlying strength within an ascending channel, despite its current dip below the 0.7950 mark. The price holding above the 50-day moving average suggests the longer-term uptrend is intact. This presents a potential opportunity for us to position for a resumption of the upward move.
Given the technical setup, we see the current weakness as a chance to enter bullish positions at more favorable levels. Buying call options with strikes around 0.8000 expiring in the next 30 to 45 days looks attractive. This strategy allows us to capitalize on a potential rebound toward the March high of 0.8042 while defining our maximum risk.
This bullish view is supported by a widening interest rate differential between the US Federal Reserve and the Swiss National Bank. The SNB recently cut its key policy rate to 1.25% in its June 2024 meeting, signaling a dovish stance, while recent US inflation data hovering around 3.3% and a strong labor market suggest the Fed will hold rates higher for longer. This fundamental divergence strongly favors the US dollar over the Swiss franc.
Should the price find support around the 0.7920 channel floor, our first target would be the recent high of 0.8042. A decisive break above this level could see a faster move toward the upper channel boundary near 0.8060. Historically, once this pair establishes a trend, it tends to persist for several weeks.
Risk Management and Alternative Scenarios
However, we must manage our risk if key support levels fail. A break below the 50-day EMA at 0.7881 would signal a potential trend reversal. In this scenario, we would look to buy put options to hedge our long exposure or to speculate on a further decline toward the May low of 0.7761.
The current price consolidation, squeezed between the short-term and medium-term moving averages, suggests that energy is building for a significant move. We could consider using a long straddle strategy, buying both a call and a put option, to profit from a sharp breakout in either direction. This would be particularly relevant ahead of upcoming inflation reports from both the US and Switzerland.
