The US Dollar rose against the Swiss Franc on Thursday after US Initial Jobless Claims fell to 206K from a revised 229K, beating the 225K forecast. This followed the Federal Reserve keeping rates unchanged at 3.50% to 3.75% in January. The minutes showed officials were divided, and some were open to more hikes if inflation stays high. In Switzerland, Q4 industrial production fell 0.7% year over year after a 2.0% rise in the prior quarter. This was the first decline since Q2 2024. The Swiss National Bank kept its policy rate at 0%.

Focus On Us Core Pce

The next major US release is December core Personal Consumption Expenditures (PCE) inflation on Friday. This report could shift rate expectations ahead of the March meeting. USD/CHF rose for a fourth straight session, reaching 0.7762. It gained nearly 0.3%, the highest level in eight trading days. The pair is still below the 50-day EMA at 0.7833 and the 200-day EMA at 0.8048, after pulling back from around 0.8041. The move lifted USD/CHF from near 0.7680 and recovered about half of last week’s decline. Resistance sits at 0.7800 and 0.7834. Support is at 0.7700, then 0.7605. The gap between the US and Swiss economies is widening, and that should shape our approach. The sharp drop in jobless claims to 206K extends the pattern of a resilient US labor market seen through 2025. With this kind of strength, the Fed has little incentive to cut rates from the 3.50% to 3.75% range.

Strategy And Positioning

Tomorrow’s US core PCE inflation report is the main event risk. The market expects a year-over-year reading close to the 3.1% seen in November 2025. A higher number could force markets to reprice Fed expectations for the March meeting. That makes holding outright long positions risky ahead of the release. At the same time, Switzerland is showing clearer signs of weakness. The Q4 drop in industrial production was the first contraction since Q2 2024. This likely reflects slower growth in key European trading partners, including Germany. With the economy under pressure, the SNB is likely to stay on hold at a 0% policy rate. This widening policy gap—between a firm Fed and a stagnant SNB—remains the main driver for USD/CHF. Technically, USD/CHF is bouncing, but it is still in a broader downtrend below key moving averages. We see a better setup in buying short-dated call options to express a bullish view over the next few weeks. This can benefit if strong US inflation pushes the pair above 0.7834, while limiting downside if the inflation data is soft and the downtrend returns. A sustained break above the 50-day moving average would signal improving momentum, with 0.7900 as the next target. But if PCE disappoints and price drops back below 0.7700, it would suggest the recent rise was only a temporary correction. The plan is to watch the market reaction to the inflation report before adding to positions. Create your live VT Markets account and start trading now.

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