Technical Momentum Signals
The Relative Strength Index (RSI) remains bullish but has turned lower towards its neutral level. A second daily close below the 50-day SMA suggests room for a further pullback. If USD/CHF drops below Tuesday’s low of 0.7784, the next level to watch is 0.7700. Further weakness would expose a support trendline in the 0.7660 to 0.7680 area. Looking back at our analysis from this time in 2025, we saw the USD/CHF pair struggling below the 0.7800 mark and failing at its 50-day moving average. The technical outlook then was clearly bearish, pointing towards potential tests of the 0.7700 level. This bearish sentiment was largely based on the downtrend that was in place at the time. The situation today is quite different, with the pair now trading firmly above 0.8100. Recent Swiss inflation data for February came in at a cool 1.1%, fueling market speculation that the Swiss National Bank may be the first major central bank to cut rates this cycle. This policy divergence is a significant catalyst that was absent last year.Policy Divergence Outlook
This contrasts sharply with the United States, where last week’s non-farm payrolls report showed a robust 250,000 jobs added, keeping the Federal Reserve on a steady path. This fundamental split suggests the path of least resistance for USD/CHF is upward, a direct reversal of the technical weakness we observed in 2025. The failure to break lower last year built a strong base for the current rally. Given this policy divergence, buying call options on USD/CHF could be a viable strategy in the coming weeks. We are looking at strike prices around 0.8200 with expirations in late April to capture potential upside from a hawkish Fed and a dovish SNB. This allows traders to position for a continued move higher with defined risk. For those more cautious, a bull call spread could limit upfront costs while still positioning for a move towards the 0.8250 resistance level. Implied volatility has remained moderate, making option premiums relatively attractive for initiating new positions. We should monitor upcoming central bank commentary closely for any change in tone. Create your live VT Markets account and start trading now.
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