USD/CHF Technical: Potential Swiss franc bullish range breakout as NFP looms

[Redator]

The USD/CHF’s sideways range environment since its 1 August 2025 swing high of 0.8170 has been getting compressed as we approach the key risk event for the FX market this week, the US non-farm payrolls and unemployment rate for August out this Friday, 5 September.

SNB rate cut cycle likely over as Swiss leading economic data improves in August

Fig. 1: Switzerland Manufacturing PMI as of Aug 2025 (Source: Trading Economics)

Fig. 2: Switzerland Services PMI as of Aug 2025 (Source: Trading Economics)

The Swiss National Bank (SNB) was the first major central bank to initiate an easing cycle in March 2024, delivering six consecutive cuts totalling 175 basis points. This brought the policy rate down from a 10-year high of 1.75% to 0% by June 2025, marking the first return to zero borrowing costs since the negative-rate era that ended in late 2022.

The next SNB monetary policy meeting will be held on 29 September, and there is a likelihood that the SNB may pause its interest rate cut cycle as two leading economic data points have started to show subtle signs of demand improvement in Switzerland.

The Swiss manufacturing PMI rose slightly to 49.0 in August from 48.8 in July, while manufacturing activities remain in contraction mode (below 50), but its negative growth momentum has continued to subside from the May 2025 print of 42.1.

In addition, service activities in Switzerland showed minor improvements as the services PMI increased to 43.9 in August from a five-year low of 41.80 printed in July.

Let’s now examine the medium-term outlook (1-3 weeks) on the USD/CHF from a technical analysis perspective.

Fig. 3: USD/CHF medium-term trend as of 4 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 weeks)

Potential bearish breakdown from the ongoing five-week range below 0.8100 key medium-term pivotal resistance, with downside trigger level at 0.7990 to expose the next supports at 0.7920/0.7870 and 0.7795 (see Fig. 3).

Key elements

• The recent bounces seen in the USD/CHF since 1 August 2025 have failed to surpass the upper boundary of the medium-term descending channel from the 3 February 2025 high, which suggests the lack of bullish momentum.
• The 4-hour Bollinger Bandwidth indicator has continued to hover at a relatively low level of 1, which highlights a volatility compression condition, a prelude to a volatility expansion that may trigger a potential imminent outburst in the price actions of USD/CHF.
• The yield spread (premium) between the 2-year US Treasury note and the 2-year Swiss government bond has continued to shrink to 3.70% since its bearish breakdown on 1 August 2025, where it was at 4.07% on 31 July 2025.
• Recently, on 22 August 2025, the 2-year yield spread of the US Treasury note and the Swiss government bond flashed out a similar bearish breakdown and traded below its 50-day moving average.
• These observations suggest that 2-year US Treasury notes are getting less attractive over similar tenures of Swiss government bonds in terms of yields, which in turn can put downside pressure on the USD/CHF.

Alternative trend bias (1 to 3 weeks)

A clearance above 0.8100 key resistance invalidates the bearish tone on the USD/CHF for a squeeze up towards the next medium-term resistances at 0.8170 and 0.8250.

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