The USDCHF has been trending downwards. It has dropped below the 100 and 200-hour moving averages after experiencing daily fluctuations. On Monday, it hit its highest point since August 1st but quickly fell below these crucial averages, dipping past the 50% retracement level at 0.80405, entering a swing zone between 0.8017 and 0.80233. Although buyers briefly pushed the price up, their momentum faded as the week went on. Recent U.S. retail sales data caused a temporary price spike toward the moving averages, but sellers swiftly brought the price down near session lows around 0.8048. If the price stays below 0.8075, the short-term outlook favors sellers. A move above this level could shift sentiment toward buyers.

Price Movement and Key Levels

If the price breaks below the 0.80405 level and continues down past the swing zone of 0.80233 to 0.8017, a further decline may be expected. Key resistance remains at 0.8075, with the first support at 0.80405 and a second support zone between 0.80233 and 0.8017. The short-term outlook remains bearish unless the price exceeds the resistance at 0.8075. Given the difficulty in holding above 0.8075, we believe the USDCHF is likely to decline. Derivative traders might consider strategies that benefit from a decrease or sideways movement below this critical resistance level. This could include buying put options with strikes targeting around 0.8020 or taking short futures positions with a stop-loss just above the 0.8075 moving average. This technical weakness in the dollar aligns with the latest economic data. The July 2025 U.S. CPI report showed core inflation easing to 2.8%, leading markets to rule out more Fed rate hikes for this year. The worse-than-expected U.S. retail sales numbers this week have also dampened the dollar’s outlook, explaining the rapid emergence of sellers on this news.

Swiss Franc Strength and Central Bank Policies

On the flip side, the Swiss franc is showing solid strength. The Swiss National Bank (SNB) has maintained a hawkish approach, with recent comments highlighting concerns about inflation, which rose to an annualized 2.1% last month, above the SNB’s target. This difference in policy between a Fed that is on hold and a vigilant SNB contributes to a weaker USDCHF. We recall the surprising 50 basis point hike by the SNB in June 2022, demonstrating their commitment to combat inflation. This history enhances the SNB’s credibility, making traders cautious about opposing a central bank focused on a strong currency policy. Consequently, shorting USDCHF rallies becomes a more attractive strategy. In the upcoming weeks, we will closely monitor the 0.8040 support level. A significant break here could lead to the June 2025 swing lows around 0.8017. Traders might use bear put spreads to manage risk while positioning for this possible move downward, especially if the price remains capped by the 0.8075 resistance. Create your live VT Markets account and start trading now.

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