THE US dollar/Swiss franc (USD/CHF) FX pair is widely considered a safe-haven currency pair due to Switzerland’s neutral geopolitical stance and its low-risk financial system, in contrast to the US dollar.
The Swiss Franc has been appreciating over the past 3 years, trading within the 1.0 to 0.9 range in 2022, 0.9 to 0.8 range in 2023 and entering the 0.7 levels after mid-2025. The pair had been trading sideways, ranging between 0.92 and 0.84 through 2023 to 2024.
The pair broke below the 0.84 level due to the US Liberation Day tariffs back in April, marking a structural shift that had brought the pair to trade more narrowly within 0.81 and 0.785.
The Swiss National Bank (SNB) recently chose to maintain interest rates at zero per cent after the Swiss inflation rate was lower than expected. The SNB also lowered its inflation forecast to 0.3 per cent.
Meanwhile, the Fed recently delivered a 25-basis-point rate cut as expected, but showed a less hawkish stance. This combination led to the fall of the USD/CHF rate, though prices have so far remained within the 0.81 and 0.785 range.
Bullish USD/CHF range trade
The stochastic oscillator (referred as “stochastic”) indicator measures a security’s closing price relative to its recent high and low prices to identify overbought and oversold price ranges. The recent movement of the stochastic on the USD/CHF shows that prices have reversed at the overbought (>80 level) and oversold (<20 level) regions.
The recent stochastic value had reversed from the oversold region with prices trading above the 0.785 support, signalling the start of a buy entry to continue the sideways range up to 0.81.
The lower long-term inflation forecast by the SNB alongside a more stable geopolitical setting for the US could also support any potential breakout of the USD/CHF at the 0.81 level.
Small bearish USD/CHF case
The recent downward movement of the US Dollar Index to the mid-98 level after reaching 100, shows some weakness in the US dollar. If the upcoming US economic data disappoints, further downside pressure to the US Dollar Index could emerge.
The Swiss Franc Index is currently hovering at the top-125 levels, having moved sideways to the six-month low at 123.
A further decline in the US Dollar Index would likely see the USD/CHF pair trading to the next support at 0.79, followed by 0.785.
The writer is dealer at Phillip Securities
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
