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USD/CHF Strengthens as Fed’s Hawkish Tone and U.S.–China Trade Truce Lift Dollar Momentum
Traders' Opinions
Summary:
The U.S. dollar extended gains against the Swiss franc on Thursday, with USD/CHF climbing near 0.8000 after the Federal Reserve’s cautious but hawkish rate cut bolstered dollar sentiment.
Buy
CLOSEDUSDCHF
End Time
0.80153
Entry Price
0.80800
TP
0.79800
SL
0.80804 +0.00377 +0.47%
194
Points
Profit
0.79800
SL
0.80347
CLOSING
0.80153
Entry Price
0.80800
TP
The U.S. dollar strengthened against the Swiss franc on Thursday, as investors responded positively to the Federal Reserve’s hawkish stance despite a widely expected rate cut. The USD/CHF pair rose around 0.20% on the day, trading near the 0.8000 level, as market participants recalibrated their expectations for further policy easing.
The Federal Reserve lowered its benchmark rate by 25 basis points to a range of 3.75% to 4.00%, meeting market forecasts. However, the tone of the accompanying statement and Chair Jerome Powell’s comments during the press conference were notably cautious about the path of future rate cuts. Powell emphasized that an additional reduction in December was “far from a foregone conclusion,” signaling that the central bank intends to proceed carefully given the recent volatility in inflation and mixed economic indicators.
This statement prompted traders to reassess the likelihood of another rate cut this year. According to data from the CME FedWatch Tool, the probability of a December rate cut fell sharply to 70% after the meeting, down from nearly 90% prior. Analysts at Brown Brothers Harriman noted that the combination of Powell’s hawkish rhetoric and a divided vote within the Federal Open Market Committee reinforced support for the U.S. dollar, as the Fed’s tone suggested a firmer commitment to managing inflation rather than pursuing aggressive easing.
The dollar’s resilience was also underpinned by improving global sentiment following an unexpected diplomatic breakthrough between Washington and Beijing. The United States and China announced a one-year trade truce that includes mutual concessions to roll back some tariffs and relax export restrictions. As part of the agreement, China pledged to resume imports of key U.S. agricultural products such as soybeans and corn, while the U.S. agreed to reduce certain tariffs on Chinese goods. Beijing also moved to lift restrictions on the export of rare earth minerals, easing concerns in sectors dependent on advanced manufacturing and technology.
The truce comes as a relief to global markets, which have been rattled by trade tensions that slowed global growth and dampened investor confidence throughout the year. Although the deal stops short of resolving deeper structural issues between the two economic superpowers, it provides a window of stability and has revived appetite for risk assets, including equities and commodity-linked currencies. For the Swiss franc, which traditionally benefits from risk aversion, the improved market mood weakened its safe-haven appeal, allowing USD/CHF to edge higher.
Meanwhile, recent economic data from Switzerland showed tentative signs of recovery. The ZEW Expectations Index for October rebounded sharply to -7.7 from -46.4 in September, reflecting a more optimistic economic outlook among analysts and investors. Additionally, the KOF Leading Indicator climbed to 101.3 from 98.0, surpassing market expectations and indicating stronger forward momentum for the Swiss economy. Nevertheless, the franc remained subdued as broader market forces favored the dollar.
Technical Analysis
From a technical perspective, USD/CHF has broken above a key resistance zone between 0.80082 and 0.80201, confirming renewed bullish momentum. The breakout has transformed this area into a fresh support base, suggesting the potential for continued upward movement. The pair’s pivot point near 0.8000 has held firm, acting as a springboard for buyers to regain control. Momentum indicators, including the Relative Strength Index (RSI) and moving averages, are tilting upward, pointing to sustained buying interest.
If the pair maintains its footing above the 0.8000 threshold, the next resistance target stands around 0.80540, corresponding to a recent swing high. A successful breach above this level would reinforce the bullish trend and open the path toward 0.8080 in the short term. On the downside, a drop below 0.8000 could trigger a mild correction toward 0.7975, though the broader structure continues to favor the upside.
TRADE RECOMMENDATION
BUY USCHF
ENTRY PRICE: 0.80150
STOP LOSS: 0.7980
TAKE PROFIT: 0.8080
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