USD/CHF Price Forecast: 0.8040 to act as key support amid correction
- The Swiss Franc outperforms as market sentiment turns risk-averse.
- The US Dollar drops as traders reconsider hawkish Fed bets.
- Improved energy flows through the Strait of Hormuz have anchored global inflation expectations.
The USD/CHF pair trades 0.2% lower at around 0.8085 during the European trading session on Friday, extending its correction from the 10-month high of 0.8140 posted on Wednesday. The Swiss Franc pair faces selling pressure as the US Dollar (USD) corrects further due to easing hopes of at least two interest rate hikes from the Federal Reserve (Fed) this year.
During press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges down to near 101.35.
The CME FedWatch tool shows that the odds of the Fed delivering at least two interest rate hikes this year are 41.7%, down from 50.2% seen a week ago.
Lower oil prices due to sustained progress in technical talks between the United States (US) and Iran and an improvement in energy flows through the Strait of Hormuz have anchored global inflation projections, which have forced traders to reconsider hawkish Fed prospects.
Meanwhile, the Swiss Franc (CHF) outperforms its major currency peers amid a cautious market mood. Artificial Intelligence (AI) stocks-led sell-off in global markets have triggered risk-off market sentiment. As of writing, S&P 500 futures are down 0.43% to near 7,330, reflecting a decline in investors' risk appetite.
Swiss Franc Price Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.04% | -0.05% | -0.08% | 0.17% | -0.01% | -0.14% | |
| EUR | 0.06% | -0.00% | 0.02% | 0.00% | 0.23% | 0.02% | -0.08% | |
| GBP | 0.04% | 0.00% | 0.02% | -0.03% | 0.23% | 0.03% | -0.09% | |
| JPY | 0.05% | -0.02% | -0.02% | -0.02% | 0.22% | 0.02% | -0.10% | |
| CAD | 0.08% | -0.00% | 0.03% | 0.02% | 0.24% | 0.04% | -0.09% | |
| AUD | -0.17% | -0.23% | -0.23% | -0.22% | -0.24% | -0.19% | -0.30% | |
| NZD | 0.00% | -0.02% | -0.03% | -0.02% | -0.04% | 0.19% | -0.12% | |
| CHF | 0.14% | 0.08% | 0.09% | 0.10% | 0.09% | 0.30% | 0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
USD/CHF technical analysis
USD/CHF trades lower at around 0.8085; however, the near-term bias is bullish as it holds above the 20-period exponential moving average (EMA), which is at 0.8007. The Relative Strength Index (RSI) at 65.37 is approaching overbought territory, hinting that upward momentum remains strong but may be prone to consolidation phases after sharp gains.
On the downside, the March 31 high at 0.8043 is the immediate support, followed by the 20-day EMA at 0.8007. Looking up, the pair could rise towards the August 1 high at 0.8172, followed by 0.8200 once it resumes its advance and break above the 10-month high of 0.8140 posted on June 24.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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