USD/CHF Forecast: Dollar-franc flirts with 0.80000 key level amid diverging SNB and Fed monetary policy stances

[Redator]

In today’s trading, USD/CHF is trading ~0.03% higher around the ~0.80132 level.

Having rallied yesterday, in today’s session dollar-franc looks for support at the 0.80000 key level, having retraced from intraday highs.

USD/CHF: Key takeaways from today’s session

• With the dollar (DXY) currently set to snap a 6-month losing streak, trading ~1.37% higher in July’s trading so far, USD/CHF has found buying support and has rallied from 14-year lows
  
• Although both recent commentary and inflation data somewhat suggest that the case for Fed rate cuts is growing, the Federal Reserve remains decidedly more hawkish than the SNB, adding to USD/CHF upside

Read more: Breaking News: US core CPI rises by 2.9% Y/Y in June vs 3.0% expected

USD/CHF: Opinions split on inflation, labour market remains strong

While to some, the Federal Reserve had already left rate cuts too late, the release of the CPI data yesterday and PPI data today continues to highlight two schools of thought regarding inflation:

1. Generally, both core consumer and producer inflation are consistently rising below expectations. Data is yet to show any significant inflationary impact from tariffs, and the nature of tariff-borne inflation is temporary. The Federal Reserve should cut rates at least twice before year-end
   
2. Although core consumer and producer inflation are consistently rising below expectations, inflation remains well above the Fed target of 2%. In the most recent CPI release, non-core inflation showed the largest monthly increase since February, while core yearly inflation rose for the first time in five months. The inflationary impact of tariffs is yet to be fully understood, and this should be approached with caution. If the data allows, a single rate cut may be possible before year-end; otherwise, rates should be maintained at ~4.50%

While the room remains somewhat split on inflation, the comparative health of the US labour market, which significantly surpassed expectations in the most recent NFP release, cannot be questioned.

As such, the current strength in the US labour market continues to justify current monetary policy decisions, especially when considering the Fed’s two-part mandate: to keep inflation stable while maximising employment.

Compared to the SNB, the Federal Reserve remains decisively more hawkish, helping support the current USD/CHF upside.

US Dollar Strength Index (DXY), TVC, TradingView, 16/07/2025

USD/CHF: Deflationary pressures and safe-haven demand boost rate cut bets

Infamous for an accommodative stance on monetary policy, persistent deflationary pressure spells trouble for the Swiss National Bank.

Coupled with recent safe-haven demand leading to a rapid appreciation in CHF currency value, making exports more expensive, the SNB holds the lowest interest rate of any major central bank, currently at 0%. Recent rate cuts represent the end of a two-and-a-half-year period of positive rates, with a return to negative rates, which is a real possibility in their upcoming decision.

Otherwise, a direct market intervention by the SNB remains possible, especially if USD/CHF reverses course and begins to fall.

Put simply, and following recent dollar-franc downside, markets are currently readjusting long-term positioning on both the US dollar and Swiss franc in line with monetary policy predictions.

At least for now, this seems to support USD/CHF upside in the near term.

USD/CHF: Technical analysis

USD/CHF, OANDA, TradingView, 16/07/2025

• Owing to recent buying, USD/CHF looks to test the upper confines of a daily downwards channel at around ~0.80938. If price can break above this level, bulls will likely target ~0.81000
  
• In line with Fibonacci retracements, 0.78736 will offer at least some support if USD/CHF pricing is to fall. To the upside, expect resistance to be met first at the key level of ~0.81000, then ~0.81208
  
• At the time of writing, USD/CHF is set to form a spinning top on the daily chart, suggesting market indecision

Read more on safe-haven currencies today: USDJPY stalls after relentless rally — technical update and key levels

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