Fundamental Overview
The USD came under some pressure on Friday as the risk-off sentiment caused by Trump’s threat of substantially increasing tariffs on China weighed on Treasury yields. Over the weekend, we had more soothing comments from Trump and other US officials which triggered a recovery in risk sentiment.
The positive mood weighed a bit on the greenback but eventually the risk mood deteriorated again as US Treasury Secretary Bessent poured some cold water on the weekend hype and the Chinese imposed special port fees on US related vessels as countermeasures against the US previous port fees.
Domestically, nothing has changed for the US dollar as the US government shutdown continues to delay many key US economic reports. The dollar “repricing trade” needs strong US data to keep going, especially on the labour market side, so any hiccup on that front is likely to keep weighing on the greenback.
The market pricing shifted more dovish after the latest US-China escalation with 48 bps of easing by year-end and 122 bps cumulatively by the end of 2026. The BLS announced last week that despite the shutdown, it will release the US CPI report on October 24, so that’s going to be a key risk event.
In case we get hot data, we will likely see a hawkish repricing in interest rates expectations with the December cut being priced out. Conversely, a soft report shouldn’t change much in terms of pricing, but it will likely weigh on the greenback anyway. This will of course be taken in context of the US-China relations by then.
On the CHF side, nothing has changed. The SNB left interest rates steady and kept everything unchanged at the last meeting. SNB’s President Schlegel didn’t offer any forward guidance but he did say that the bar to cut rates further is very high and negative inflation prints in the short-term won’t be enough.
The last Swiss inflation prints rebounded a bit but there’s a long way to go before breaching their 2% inflation limit. So, this leaves the CHF trading mostly based on the risk sentiment.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that USDCHF broke above the major downward trendline last week and extended the rally into the 0.8075 level before pulling back a bit and then selling off on Trump’s escalation. We can see that we have a major upward trendline now defining the bullish momentum. The buyers will likely lean on the trendline with a defined risk below it to position for a rally into the 0.8171 level. The sellers, on the other hand, will look for a break lower to extend the drop into the 0.7871 level next.
USDCHF Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the recent price action. Again, the buyers will have a better risk to reward setup around the trendline, while the sellers will continue to step in around the 0.8072 level and look to increase the bearish bets on a break below the trendline.
USDCHF Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline that’s acting as resistance. The sellers will likely continue to lean on it to keep pushing into new lows, while the buyers will look for a break higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have Fed Chair Powell speaking although he’s unlikely to change his stance given that we haven’t got anything new on the data front. For now, we know that only the US CPI will be published despite the shutdown, which is scheduled for Friday October 24.
