USDCHF is currently facing a significant resistance level as traders prepare for the FOMC meeting and important US economic updates. Last week, the USD saw some gains but didn’t have a clear reason for this shift, leaving the market waiting for a new trend. The common trade strategy is to “short the US dollar,” so any sudden price changes could be a natural response. The Swiss National Bank (SNB) is not expected to lower interest rates further, as it has already adopted a zero interest rate policy. For rates to turn negative, there would need to be severe shocks in inflation data, which the market does not foresee.

Technical Analysis

On the daily chart, USDCHF is testing the resistance level at 0.8050, which aligns with an important trendline. Sellers might look to enter their positions here for a potential drop, while buyers hope for a breakout towards 0.85. The 4-hour chart reveals a minor upward trendline supporting bullish sentiment, with buyers looking for a breakout and sellers aiming to push prices lower. The 1-hour chart also shows an upward trendline backing bullish movements. This week’s key economic data includes US job openings, consumer confidence, ADP employment figures, GDP reports, and the FOMC decision. Thursday will bring jobless claims and the Employment Cost Index, culminating in Friday’s NFP report and ISM Manufacturing PMI. The USD/CHF pair is at a critical resistance point of 0.8050. With the Federal Reserve’s interest rate decision and key jobs data this week, we anticipate increased market volatility. Traders in derivatives should prepare for significant price movements starting as soon as today.

Market Sentiment

Currently, many believe the US dollar will decline, making this a risky stance. A recent survey by Bank of America found that betting against the dollar is among the most crowded trades, which could lead to a quick rally if US economic news is unexpectedly strong. This makes purchasing short-term call options an appealing strategy for positioning for potential positive surprises. From the perspective of the Swiss franc, it seems the SNB is finished with rate cuts for the moment. Swiss inflation is steady at about 1.4%, which isn’t low enough to compel the central bank to act more aggressively. This underlying strength in the franc supports selling USD/CHF at the 0.8050 resistance level. Today’s JOLTS job openings report will offer the first insight for the week’s direction. Job openings have been slowly decreasing, dropping from over 9 million last year to about 8.5 million recently. If today’s report shows another weak number, it might prompt more sellers to enter the market ahead of the Federal Reserve’s announcement tomorrow. Given the uncertainty, we are considering options strategies to benefit from a significant price move, regardless of the direction. Implied volatility for one-week USD/CHF options has already increased by over 15% in anticipation of this week’s events. In this environment, a long straddle—where a trader buys both call and put options—could be an effective way to capitalize on a breakout. Looking back, we experienced a similar consolidation phase in early 2024 before a significant trend began after crucial inflation and employment reports. This history suggests that once a direction is established, it is likely to continue. Employing risk-defined strategies, such as put spreads for anticipated declines or call spreads for potential increases, is a wise approach. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now