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USD/CHF Rises as Fed Holds Line on Rates, SNB Signals Dovish Tilt
Summary:
USD/CHF advances above 0.8250 as the U.S. Dollar strengthens on the back of the Fed's steady policy stance and renewed trade developments with the UK, while dovish signals from the Swiss National Bank weigh on the Franc.
CLOSED
0.82601
ENTRY
0.83317
TGT
0.82000
SL
0.82976 -0.00173 -0.21%
716
Points
Profit
0.82000
SL
0.83317
CLOSING
0.82601
ENTRY
0.83317
TGT
The USD/CHF pair extended its upward trajectory during the European session on Thursday, rising convincingly above the 0.8250 level. The move comes as the U.S. Dollar capitalized on a wave of macroeconomic clarity and hawkish undertones from the Federal Reserve, while the Swiss Franc came under pressure following dovish rhetoric from Swiss policymakers. Investors also reacted positively to the announcement of a forthcoming trade deal between the United States and the United Kingdom, a development seen as supportive for the Greenback’s momentum in the near term.
The rally in the USD was underscored by comments from Fed Chair Jerome Powell, who reiterated the central bank’s cautious stance at the conclusion of its latest policy meeting. For the third consecutive time, the Federal Open Market Committee left interest rates unchanged, maintaining the benchmark federal funds rate in the range of 4.25% to 4.50%. The decision came amid elevated uncertainty regarding the broader economic outlook and the potential impacts of recent U.S. fiscal and regulatory measures.
“My gut tells me that uncertainty is extremely elevated,” Powell stated in his post-meeting remarks, reinforcing the Fed’s desire to wait for clearer economic signals before moving on rates. He also warned that risks to both inflation and the labor market now appear skewed to the upside, suggesting that policymakers are not ruling out additional tightening should price pressures persist. These comments were received by markets as subtly hawkish, breathing fresh life into the U.S. Dollar, with the Dollar Index (DXY) rallying to near 100.20.
Supporting the Greenback further was a fresh dose of geopolitical optimism. President Donald Trump confirmed that the White House had finalized a new bilateral trade agreement with a major ally, later identified by The New York Times as the United Kingdom. The deal is being interpreted as a strategic pivot to bolster transatlantic trade in the post-Brexit era and reduce global trade friction. While full details of the agreement remain under wraps, the announcement itself served to bolster investor confidence and reinforce the notion that the U.S. is pursuing proactive measures to stabilize its external economic relationships.
However, not all developments were straightforwardly bullish. Investors are bracing for potential volatility heading into the weekend, as U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are set to hold crucial talks with their Chinese counterparts in Switzerland. The meeting, scheduled for Saturday, will focus on efforts to de-escalate ongoing trade tensions between the world’s two largest economies. Any outcome, whether conciliatory or confrontational, could reshape sentiment heading into next week and determine whether the U.S. Dollar continues to advance or faces a corrective pullback.
Meanwhile, across the Swiss border, the Franc has struggled to keep pace. The Swiss National Bank has adopted an increasingly dovish tone, which has weighed on the local currency. Speaking on Tuesday, SNB Chairman Martin Schlegel signaled a willingness to revisit negative interest rates should inflation fall below acceptable levels. “No one likes negative rates, but if we have to, we are prepared to do it again,” Schlegel remarked candidly. The comment underscores the SNB’s longstanding commitment to price stability, even at the cost of returning to ultra-loose monetary policy.
The Franc’s underperformance reflects the growing divergence between the SNB and the Federal Reserve. While the Fed remains on guard against inflation, the SNB appears more concerned with staving off deflationary risks. This divergence in policy outlooks has placed downward pressure on CHF and provided tailwinds for USD/CHF, which has now entered a bullish technical phase.
Technical Analysis
From a technical standpoint, the setup in USD/CHF suggests that bulls are firmly in control. Following a liquidity grab near the recent weekly low at 0.81924, the pair staged a sharp rebound, confirming an internal structure shift and triggering a trend reversal. Price action traders noted the emergence of a classic AMD (Accumulation-Manipulation-Distribution) pattern, typically a strong indication that institutional demand has re-entered the market. The pair has since rallied from a key demand zone and is now poised to challenge the next resistance level around 0.83317, which marks the previous weekly high.
TRADE RECOMMENDATION
BUY USDCHF
ENTRY PRICE: 0.8260
STOP LOSS: 0.8200
TAKE PROFIT: 0.83317
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Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.
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