Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound

Summary:

This rebound suggests that the support is being defended, potentially encouraging traders to begin building long positions.

Buy USDCHF

End Time

CLOSED

0.78897

ENTRY

0.80000

TGT

0.78100

-- -- --

396

Points

Profit

0.78100

0.79293

CLOSING

0.78897

ENTRY

0.80000

TGT

The Swiss National Bank (SNB) is set to announce its next monetary policy decision on September 25, with markets widely expecting rates to remain unchanged at zero. Policymakers have recently shown greater tolerance toward a stronger Swiss franc, arguing that rising costs abroad have helped reduce the extent of its real overvaluation.

Meanwhile, the Producer and Import Price Index fell by 0.6% in August, marking a sharp annual drop of 1.8%. Broader inflation continues to sit comfortably within the SNB’s 0–2% target range, easing the urgency for further policy accommodation.

SNB President Martin Schlegel has downplayed the need for negative rates but reiterated that the central bank remains flexible and ready to adapt to evolving data. The September 25 policy meeting will be pivotal, as updated inflation forecasts and growth risks are expected to guide the bank’s future policy stance.

Across the Atlantic, the Federal Reserve acknowledged growing downside risks to the U.S. labor market, noting that while unemployment remains relatively low, it has edged slightly higher. The policy decision was not unanimous, with Governor Stephen Miran voting in favor of a more aggressive 50 basis-point cut, aligning with some analysts who had anticipated such a move.

During the press conference, Fed Chair Jerome Powell remarked that labor demand has “softened,” while inflation remains “somewhat elevated.” He highlighted that the balance of risks has “shifted,” stressing that monetary policy is well-positioned to respond as needed, though he cautioned that the labor market is “not strong.”

Powell also dismissed speculation about a larger cut, saying there was “no broad support for a 50 basis-point cut today,” and underscored that the Fed is not rushing to ease policy further.

The Fed’s statement reiterated its concerns about downside risks to employment, while acknowledging that price pressures have increased and remain “somewhat elevated.” According to the Summary of Economic Projections (SEP), most officials now expect the federal funds rate to end 2025 at 3.6%, with GDP growth at 1.6% and unemployment rising to 4.5%. Inflation is projected to end the year at 3%, while core PCE is seen holding at 3.1%. Policymakers expect inflation to return to the 2% target by 2028.

U.S. Treasury yields slipped after the Fed delivered its first rate cut since December last year, sparking a rally in risk assets. Investors grew more confident that lower borrowing costs will support the U.S. economy, particularly its lagging labor market, driving Treasury yields lower across the curve.

Recent U.S. data painted a mixed picture for August. Housing Starts tumbled 8.5% month-over-month, wiping out July’s 3.4% gain, dropping to 1.307 million units from 1.429 million — the lowest level since May. Building Permits also fell by 3.7%. In contrast, Retail Sales beat expectations, climbing 0.6% versus a forecast of 0.2%, while the Control Group — a key input to GDP calculations — rose 0.7% following a 0.5% gain in July. Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound_1

Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound_1

Technical Analysis

USD/CHF briefly dipped to 0.7831 during the volatility surrounding the Fed’s decision, pushing the RSI on the 12-hour chart down to 27 — deep in oversold territory. However, this downside move proved short-lived, as the pair rebounded and closed back above the key support level at 0.7875, which was last tested on July 1. This rebound suggests that the support is being defended, potentially encouraging traders to begin building long positions targeting the descending trendline and the psychological resistance zone around 0.8000.

The 100- and 200-period moving averages sit at 0.8018 and 0.8096 respectively, having closely tracked price throughout its downtrend. These levels could become near-term upside targets if bullish momentum strengthens. Should USD/CHF break above the descending trendline and sustain gains, the recovery could extend further. However, a pullback from these resistance levels cannot be ruled out if sellers return to defend the broader downtrend.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7890

Target price: 0.8000

Stop loss: 0.7810

Validity: Sep 26, 2025 15:00:00

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Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound

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Bearish Momentum May Have Bottomed, Setting the Stage for a Rebound

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