The USD/CHF pair is struggling to keep its rally above the 11-week high of 0.8125 and has dipped slightly to about 0.8095 during late Asian trading. This pause follows a retracement in the US Dollar after the release of US ADP Employment Change and ISM Services PMI data for October. The US Dollar Index, which measures the dollar against six major currencies, has fallen a bit to around 100.05 after hitting a five-month peak of 100.35. The latest ADP Employment report showed 42,000 new jobs in October, exceeding the expected 25,000. Additionally, the Services PMI improved to 52.4, above the estimate of 50.8.

Fed Rate Cut Probabilities

The outlook for the Federal Reserve’s December meeting now shows a reduced chance of a 25 basis point interest rate cut, estimated at 62.5%, down from 94.4%. For the Swiss Franc, SNB Chairman Martin Schlegel expects inflation to rise slightly, which means interest rates will likely stay steady. This is good news for the Swiss currency. The ADP Employment Change measures changes in private-sector jobs and influences consumer spending and economic growth. Traders pay close attention to ADP data as it can indicate trends before the Nonfarm Payrolls report from the Bureau of Labor Statistics. Higher employment numbers often suggest increased inflationary pressures and can impact interest rate decisions. We are seeing the USD/CHF pair pull back from its 11-week high near 0.8125. This seems to be a temporary pause rather than a reversal. The dip appears to be driven by profit-taking in the US Dollar after its recent gains. For traders, this might offer a better opportunity to position for a bullish move.

US Economic Data and Market Strategy

Recent upbeat US economic data, especially the ADP job figures that exceeded estimates by nearly 70%, strengthen expectations for a solid Nonfarm Payrolls report this Friday. In early 2024, we observed a similar trend where strong labor reports pushed the dollar higher against other currencies. With the market now factoring in only a 62.5% chance of a Fed rate cut in December, down from over 90% just last week, the fundamental support for the USD looks strong. Given this positive outlook, we should consider buying call options on USD/CHF to benefit from the anticipated upward movement. December 2025 expiry contracts with a strike price around 0.8200 could yield profits if the pair breaks through recent highs following the NFP data. This strategy minimizes downside risk while offering substantial upside potential if the US Dollar rally continues as expected. While the Swiss National Bank’s comments about maintaining rates are relevant, they are unlikely to outweigh the influence of the Federal Reserve. The interest rate differential, with the US benchmark rate currently at 3.75-4.00% compared to Switzerland’s 1.75%, strongly favors the US Dollar. Any strength in the Swiss Franc is likely to be short-lived and may provide even better levels to enter long USD/CHF positions. Create your live VT Markets account and start trading now.

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