The USDCHF saw a swift downturn amid a soft U.S. dollar and cautious remarks from a Swiss National Bank official. However, the pair found support between 0.7910 and 0.79209 and has since rebounded, prompting analysts to watch for further gains—or a renewed wave of selling.
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Policy Analysis
USDCHF bounces higher after hitting a targeted support.
Photo by Forexlive
Key Takeaways:
- The Swiss National Bank (SNB) maintains a zero policy rate, leaving limited room for additional easing.
- SNB official Schlegel signals negative rates would return only under “exceptional circumstances.”
- USDCHF tested a key support between 0.7910 and 0.79209, dropping to a low of 0.79148.
- The pair rebounded to around 0.79556, forming a near-term resistance level.
- Traders look to 0.7975 (38.2% retracement) and 0.7986–0.7994 for the next potential resistance points.
SNB Official Comments
Recent comments from the Swiss National Bank’s Thomas Schlegel underscore the cautious stance of the central bank. He noted that negative interest rates, which impose additional costs on savers and pension funds, will only return under “exceptional circumstances.” With the policy rate now at zero, the SNB remains cautious about further rate cuts, echoing concerns about preserving its limited policy space in light of ongoing global trade tensions and subdued domestic inflation.
Market Dynamics and the Downward Move
Yesterday, the USDCHF pair experienced a sharp decline, spurred in part by a weaker U.S. dollar. The move was also influenced by the SNB’s stance, which signaled a reluctance to deploy further rate cuts. Traders viewed these developments as a momentary catalyst for renewed selling, aligning with broader expectations that rates will remain steady into 2026.
Finding Support
Despite the selloff, buyers emerged in a critical technical area marking swing lows from July, between 0.7910 and 0.79209. The pair reached an intraday low of 0.79148 before reversing course, confirming that this zone remains a key support pocket.
Key Technical Levels
| Level | Significance |
|---|---|
| 0.7910–0.79209 | Support area based on July’s swing lows |
| 0.79556 | Resistance from Friday’s swing low |
| 0.7975 | 38.2% retracement from last week’s high |
| 0.7986–0.7994 | Potential overhead swing area |
Testing Resistance
Following its rebound, USDCHF climbed to 0.79556, which now stands as a near-term resistance level. If sellers return in force at this point and push prices below the 0.7938 to 0.7947 region, the currency pair could revisit the lower support area. Should the pair break above 0.79556, the next upside targets lie around the 38.2% retracement level of 0.7975, followed by another swing area between 0.7986 and 0.7994.
Looking Ahead
Traders remain divided on whether the downward trajectory will resume or if the pair can solidify its recovery. With the SNB watchful about future policy shifts—and global markets keeping an eye on trade conditions—USDCHF’s path will hinge on how effectively each side of the market defends key technical levels in the sessions to come.
