USD/CHF extended its run on Wednesday, trading near 0.7900 for a third consecutive daily gain as Middle East tensions and firmer US jobs data supported the US dollar. ADP reported private payrolls rose to 122K in May from 105K in April, above the 117K consensus and the strongest reading since March 2025. The US Dollar Index (DXY) was around 99.47, up 0.25% on the session, near the top of its recent range. JOLTS data released on Tuesday also came in stronger, showing the highest level of job openings since May 2024.
US activity signals were mixed: the final S&P Global Services PMI edged down to 50.7 in May from 50.9 and undershot expectations of 51, while the ISM Services PMI rose to 54.5 from 53.6, beating the 53.8 forecast. Focus now shifts to Friday’s Nonfarm Payrolls, with economists looking for 85K jobs in May after 115K in April, a release that could shape Federal Reserve (Fed) expectations as oil-linked inflation risks remain in view. In Switzerland, Thursday’s CPI is expected at 0.8% year on year in May, up from 0.6% in April, while the SNB has reiterated its readiness to intervene in FX markets; geopolitics remain in focus as the US and Iran discuss ending the war.
US Dollar Strength and Labor Market Momentum
We see the USD/CHF pair extending its gains, having now pushed through the 0.7900 level. The primary driver is a strengthening US Dollar, which is finding support from solid labor market figures and a general flight to safety amid Middle East tensions. This creates a clear upward momentum for the pair that we should watch closely.
Our immediate focus is on the US Nonfarm Payrolls (NFP) report due this Friday, June 5th. The stronger-than-expected ADP report, showing 122,000 jobs added in May, suggests there could be an upside surprise to the 85,000 forecast for NFP. A strong number would likely reinforce the Federal Reserve’s hawkish stance.
Current market pricing reflects this hawkish sentiment. According to the CME FedWatch Tool, the probability of a Fed rate cut at its next meeting on June 17th has fallen to just 12%. This is a significant drop from over 40% a month ago, showing that traders are now expecting rates to stay higher for longer.
SNB Policy Divergence and Strategic Outlook for USD/CHF
On the other side of the trade, the Swiss National Bank (SNB) is sending clear signals that it will not tolerate a strong Franc. With Swiss inflation expected at only 0.8%, well below its 2% target, the SNB has ample room to intervene in the currency markets. Chairman Schlegel’s comments last week confirm this dovish bias is firmly in place.
This divergence in central bank policy suggests that buying USD/CHF call options is a prudent strategy for the coming weeks. This approach allows us to profit from a potential upward spike following the NFP report while capping our potential losses if the data unexpectedly disappoints. The clear policy differences provide a strong fundamental reason for the pair to continue its climb.
Looking at historical data, the current 0.7900 level for USD/CHF is significantly below its five-year average of approximately 0.9150. This suggests there is substantial room for the pair to move higher before encountering major long-term resistance. We view the current levels as an attractive entry point for a longer-term bullish position.
