The USD/CHF currency pair has shown significant volatility following the latest U.S. Nonfarm Payroll (NFP) benchmark revisions, which revealed a slower-than-expected labor market. After a period of decline, the pair rebounded strongly, rising 0.51%, as traders adjusted positions in light of softening U.S. employment data.
The rebound has reinforced market expectations that the Federal Reserve (Fed) may adopt a dovish stance, potentially cutting interest rates at the September FOMC meeting. In their latest article, Solancie experts provide an accessible breakdown of the topic.
At the time of writing, USD/CHF trades near 0.7971, holding steady as the Asian session begins. Market participants remain cautious, balancing the potential for further bullish momentum against ongoing bearish technical signals.
Nonfarm Payroll Revisions Highlight Cooling U.S. Labor Market
The U.S. Bureau of Labor Statistics (BLS) recently revised prior Nonfarm Payroll data, showing weaker job creation than initially reported. This downward adjustment confirms that the labor market is cooling, increasing expectations that the Fed may consider a rate cut to support economic growth.
Despite the dovish implications for U.S. monetary policy, the Swiss Franc (CHF) has remained relatively stable, suggesting that traders are pricing in the potential for Fed easing rather than broad risk aversion. The USD/CHF reaction to this data underscores how labor market indicators can directly influence major currency pairs, especially those tied to safe-haven currencies like the Swiss Franc.
Technical Overview: USD/CHF Bounces from Support
From a technical perspective, USD/CHF found strong support near 0.7900, where buyers entered the market and pushed the pair approximately 70 pips higher toward 0.7970. This bounce highlights the importance of key support levels in maintaining short-term bullish momentum, even amid broader bearish trends.
The Relative Strength Index (RSI), however, remains in bearish territory, signaling that the overall momentum is still under pressure. Traders should monitor whether USD/CHF can break above the September 8 high of 0.7995, as doing so could trigger a move toward 0.8000, a level that is both psychologically significant and technically important.
SMA Confluence: 20- and 50-Day Moving Averages
A successful break above 0.8000 could set the stage for USD/CHF to test the confluence of the 20-day and 50-day Simple Moving Averages (SMA) at 0.8022 and 0.8029, respectively. SMA confluence zones are key technical areas, often attracting short-term traders and serving as critical decision points for trend continuation.
If the pair clears this SMA cluster, the next potential target is 0.8100, with the 100-day SMA at 0.8115 acting as an additional resistance barrier. Breaching these levels would significantly strengthen the bullish trend bias, indicating that USD/CHF may be reversing its recent downtrend.
Key Support Levels and Downside Risks
While bulls target higher levels, downside risk remains a key consideration. Failure to maintain support at 0.7900 could expose the July 1 swing low at 0.7872, reinforcing the longer-term bearish trend bias.
Traders should also consider stop-loss clusters near these support zones, as a breach could accelerate downside momentum, creating opportunities for short positions. Monitoring price action around critical support and resistance levels is essential, particularly in periods of economic uncertainty and volatile market reactions.
USD/CHF and Fed Rate Cut Speculation
The weaker NFP revisions have reignited market speculation about a potential Fed rate cut. Traders are now weighing the likelihood of the Fed easing against other macroeconomic indicators, including consumer spending, inflation metrics, and ISM manufacturing data.
A confirmed rate cut would likely pressure the U.S. Dollar, making USD/CHF sensitive to shifts in Fed policy expectations. Interestingly, the recent USD/CHF bounce suggests that traders are not just reacting to short-term data but also positioning ahead of policy announcements, highlighting the pair’s sensitivity to monetary policy divergence.
Broader Market Context
Beyond technicals, USD/CHF is influenced by broader macro dynamics. The Swiss Franc traditionally serves as a safe-haven currency, gaining strength during risk-off environments. Conversely, the U.S. Dollar is closely tied to interest rate expectations, making Fed policy decisions central to short- and medium-term forecasts.
The recent labor market slowdown has highlighted market sensitivity to U.S. economic indicators, reinforcing the view that USD/CHF will likely remain range-bound unless a major policy shift or geopolitical event drives volatility.
Conclusion
The USD/CHF pair is currently navigating between critical support at 0.7900 and resistance near 0.8000, following NFP revisions that underscored a cooling U.S. labor market. Expectations of a Fed rate cut have supported the rebound, but momentum indicators remain cautious, suggesting that technical confirmation is required before a sustained uptrend can be confirmed.
Key levels to watch include the SMA confluence at 0.8022/0.8029, 0.8100, and the July swing low at 0.7872. Traders should remain vigilant, as price action near these zones will likely determine whether USD/CHF continues its bullish recovery or reverts to a bearish trend.
