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Can USD/CHF Break Higher Amid Fed’s Hawkish Stance?

The US Dollar is strengthening against the Swiss Franc, with USD/CHF gaining ground on Thursday as robust US economic data and a hawkish central bank outlook boost demand for US yields. Trading above 0.8000, the pair shows signs of a bullish shift—can it push past key resistance or face a reversal?

Strong Data Backs Hawkish Policy

US Retail Sales for June climbed 0.6%, surpassing the 0.1% forecast, signaling resilient consumer spending despite tariff uncertainties and elevated interest rates. This uptick, paired with a solid labor market, bolsters the central bank’s cautious stance, delaying expectations of a September rate cut. With inflation concerns tied to potential tariff hikes looming ahead of the August deadline, policymakers remain focused on keeping price pressures in check, supporting the Dollar’s rise.

Rate Cut Odds Fade, Boosting USD/CHF

Expectations of a September rate cut have waned, with the probability dropping to 52.7% from 65.4% last week, while the chance of rates holding at 4.25%-4.50% rises to 46.0% from 29.7%. This central bank divergence, reinforced by comments advocating a restrictive policy “for some time,” underpins USD/CHF strength. Improved risk sentiment further dims rate cut prospects, fueling the pair’s upward momentum.

Technical Signs Point to Gains

USD/CHF’s daily chart hints at a short-term bullish reversal, breaking above the 20-day simple moving average at 0.7995 and the 23.6% Fibonacci retracement at 0.8015. The Relative Strength Index has crossed above 50, shifting momentum to neutral. Resistance looms at 0.8103, with potential upside to 0.8174 and 0.8246 if cleared, while support at 0.7995-0.7950 holds the key to this trend.

What’s Next for USD/CHF?

The pair’s trajectory depends on upcoming data and tariff developments. A sustained break above 0.8103 could signal further gains, but a drop below 0.7950 might trigger a pullback. Markets teeter on a knife-edge—will the Dollar’s strength persist or fade?

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