Trading USD/CHF: What to Expect After the US Dollar’s Multi-Month Highs

• USD/CHF is facing resistance at the 0.8900 handle after breaking above the 200-day MA.
• The US Dollar Index (DXY) is also at multi-month resistance, raising questions about a potential pullback.
• The Swiss Franc’s recent weakness will be welcomed by Swiss exporters and eases pressure on the Swiss National Bank (SNB).

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USD/CHF has run into resistance around the 0.8900 handle having broken above the 200-day MA for the first time since late July. The recent US Dollar rally drove the pair higher as the CHF has faced headwinds due to a lack of safe haven flows in recent weeks. 

The USD Index itself has risen to levels last seen in November 2023 around the 107.00 handle. Market participants are no doubt hoping for a pause around this level with a bit of weakness evident in today’s US session with the DXY retreating from multi-month resistance to trade around 106.55 at the time of writing.

US Dollar Index (DXY) Daily Chart, November 14, 2024

Source: TradingView (click to enlarge)

Fundamental Backdrop 

The weakness in CHF is not the worst thing in the world, especially where Swiss exporters are concerned. The Swiss economy and businesses in general had made a plea a few months ago to the Central Bank as the Swiss Franc benefitted from safe haven flows to strengthen to multi month highs against G7 counterparts. This had a negative impact on many sectors of the Swiss economy which rely on exports as prices rose. 

US data this week has also done little to ease concerns that the Fed may not cut rates as much as expected in 2025. An uptick in PPI data as the labor market appears to be cooling is not really a positive sign as inflationary fears have risen following the election of Donald Trump. For the first time since April 2023, Core PPI and CPI inflation are back above 3.0%.

Ahead we have Fed Chair Powell speaking later in the US session, will we get any change in rate cut expectations? I do doubt any change will take place as I expect the Fed Chair to keep up the rhetoric that the data will decide policy. I take that as the Fed will wait to gauge the impact of incoming President Donald Trump’s policy on tariffs etc and see what the actual impact will be on inflation moving forward. 

We wrap up the week with US retail sales tomorrow. 

Source: For all market-moving economic releases and events, see the MarketPulse Economic Calendar.  (click to enlarge)

Technical Analysis

From a technical standpoint, USD/CHF has broken above the inner and outer trendline as well as the 200-day MA. USD/CHF has rallied some 500 pips since October 1 but has paused at the resistance level around the 0.8900 handle.

Given the strength of the trend i would expect the bulls to push through this level but there are warning signs flashing that a retracement may be imminent. Looking at the DXY, it has run into multi-month resistance at the 107.00 handle while also hovering in overbought territory. This is a mirror of the USD/CHF which is also now trading overbought territory based on the 14 period RSI and has run into resistance as well.

A lot will hinge on how the DXY navigates the resistance level at 107.00.

If USD/CHF experiences a pullback, immediate support rests at the 200-day MA around 0.8819 with further support offered at 0.8757.

Conversely, a move higher from here will be eyeing the psychological 0.9000 handle before resistance at 0.9040 and 0.9087 come into focus. Based on the rules around trendline, the 0.9040 handle is a key area as it was the second point of contact for the descending trendline and could prove a tough nut to crack.

USD/CHF Daily Chart, November 14, 2024

Source: TradingView (click to enlarge)

**Please note that this is a follow- up piece. Further technical analysis here: USD/CHF Technical Outlook: Confluence Area Hints at Bullish Breakout

Support

• 0.8819
• 0.8757
• 0.8633

Resistance

• 0.8890
• 0.9000
• 0.9040

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