USD/CHF paused on Monday after rising by nearly 1.2% over the previous four trading days. The pair stayed firm, with pullbacks held above 0.7850 and price still near two-week highs at 0.7877.
Risk demand improved after an Iranian Foreign Ministry spokesperson said talks between Washington and Tehran were ongoing. The comments also referred to reopening the Strait of Hormuz, which reduced demand for the US Dollar.
Technical Outlook And Key Levels
Technically, USD/CHF is trading above the top of a descending wedge pattern. On the 4-hour chart, the RSI is near 60 after easing from overbought levels, and the MACD histogram shows moderate positive momentum.
Support is seen near the early May highs around 0.7845, alongside a reverse trendline near 0.7835. A break below these areas would weaken the bullish setup and bring the May 13 and 14 lows near 0.7800 into view.
Resistance is first located at the 0.7877 intraday high. Above that, the next area sits between 0.7925 and 0.7930, matching the April 13 and 29 highs.
Looking back at the analysis from this time in 2025, we saw a clear bullish setup for USD/CHF emerging from a technical pattern. The key was that dips were contained above the 0.7850 level, confirming that buyers were in control. That period’s cautious optimism was based on technicals and a slight easing of geopolitical risk.
Fundamentals And Strategy Considerations
Today, that upward pressure is even more pronounced due to the widening interest rate differential between the Federal Reserve and the Swiss National Bank. The Fed has held rates firm at 5.25% to combat persistent inflation, which recent CPI data pegged at 3.1%, while the SNB initiated a cutting cycle last quarter with its policy rate now at 1.25%. This policy divergence is a far stronger driver than the technical breakout we observed last year.
Swiss inflation, reported last week at a mild 1.4%, gives the SNB ample room for further easing, creating a powerful tailwind for the USD/CHF pair. This economic backdrop has propelled the pair well past the 0.7900 levels discussed last year, with the current spot price hovering around 0.9120. The fundamental story has now taken complete control from the technical picture.
Given this sustained momentum, we should consider strategies that benefit from a continued, steady ascent rather than explosive volatility. For the coming weeks, a bull call spread using June or July options seems prudent, perhaps buying the 0.9150 strike and selling the 0.9250 strike to cap costs and define risk. This allows us to profit from the expected upward drift driven by central bank policy.
Traders with a more conservative outlook, confident that downside is limited by the stark interest rate gap, could look at selling out-of-the-money puts. Selling July puts with a strike around 0.9000 would allow us to collect premium while the fundamental story plays out. This strategy capitalizes on the view that the SNB’s dovish stance provides a strong floor for the pair.
