USD/CHF traded higher on Tuesday, up 0.21%, with the pair probing the week’s peak at 0.7884 after rebounding from an intraday low of 0.7844. The move came as risk appetite improved on AI-related optimism, while the dollar recovered in a backdrop of uncertainty surrounding the outcome of US-Iran talks.
On the charts, the pair has pushed through the 50-day SMA at 0.7864, while the RSI remains in bullish territory. A break above 0.7900 would bring the 200-day SMA at 0.7904 into view, and then open the way towards the 19 March high at 0.7958, with 0.80 beyond. If the rate slips back under the 50-day SMA, attention would shift to the 20-day SMA at 0.7834, then the 100-day SMA at 0.7828, with 0.7800 next.
Technical Momentum And Fundamental Drivers
We see the USD/CHF pair showing renewed strength after clearing its 50-day moving average, signaling a potential upward trend for the coming weeks. The bullish reading on the Relative Strength Index (RSI) further suggests that momentum is shifting in favor of the US dollar. This technical setup points towards an opportunity for further gains.
The dollar is finding support from strong economic data, as the recent May 2026 Non-Farm Payrolls report showed a healthy addition of 215,000 jobs. This outperformance gives the Federal Reserve little reason to change its current policy path. This makes holding dollars more attractive compared to other currencies.
In contrast, the Swiss National Bank has signaled continued caution, as recent inflation figures came in at 1.8%, just below their target. This suggests the SNB is unlikely to tighten policy soon, creating a divergence that favors the dollar. This policy difference is a key driver for our outlook.
Strategy And Risk Management
Given this, we are looking at buying call options with strike prices just above the current market, specifically targeting a break of the 0.7900 level. We would then look at strikes near the 0.7950 mark for July 2026 expiry as our next objective. The potential for the pair to test the 0.8000 level has not been this strong for several months.
However, we must manage our risk if the pair fails to hold these gains. A drop back below the 50-day moving average at 0.7864 would be a warning sign. If that happens, we might consider buying put options to hedge our position or speculate on a move down towards 0.7830.
Reaching the 0.8000 level would be significant, as the pair has not consistently traded at that level since the first quarter of 2026. This move could represent a reversal of the downtrend we saw in late 2025. We will be watching trading volume closely if the price approaches that psychological barrier.
