The USD/CHF currency pair is exhibiting fresh signs of bullish momentum after rebounding sharply from a six-week low of 0.8155, powered by a resurgence in US Dollar strength. The rally follows the release of robust JOLTS job openings data, which painted a more resilient picture of the US labor market than expected, helping the Greenback push higher across the board.
As of writing, USD/CHF trades at 0.8203, marking a 0.26% intraday gain, hinting at a short-term shift in market sentiment. NordaLueur provides expert broker insights to explain this topic thoroughly in this article.
Technical Outlook: Bullish Engulfing Formation Emerging
From a technical analysis perspective, the daily chart shows the formation of a bullish engulfing candlestick, a potential early reversal signal that traders often watch for when a market is in a downtrend. This candlestick pattern suggests that bullish pressure could outweigh the recent selling momentum, particularly if follow-through buying emerges in the next few sessions.
Despite the recent bounce, the broader bearish trend remains intact. USD/CHF continues to print a sequence of lower highs and lower lows, consistent with a downtrend.
For the pair to meaningfully reverse its trajectory, bulls would need to reclaim and hold above the 50-day Simple Moving Average (SMA), which currently lies at 0.8351. That level serves as a key dynamic resistance, with potential for further upside only if that barrier is convincingly broken.
Upside Targets: 0.8347, 0.8400, and 0.8475
If buyers manage to extend the current upside momentum, immediate resistance looms at the May 29 swing high of 0.8347. A sustained break above this point would not only confirm the bullish engulfing pattern but also bring the pair closer to the 50-day SMA, a critical trend indicator.
Beyond that, traders would set their sights on 0.8400, a psychological resistance zone that has historically acted as a price magnet. Should this level give way, the May 12 high at 0.8475 becomes the next significant target.
This multi-week high represents a pivot area where sellers have previously emerged, and it would likely attract significant interest from both breakout traders and profit-takers.
Downside Risks Remain: 0.8200, 0.8100, 0.8083, and 0.8000
While the short-term tone has improved, failure to maintain prices above 0.8200 could see bearish pressure resume. A move back below this round number would invalidate the bullish engulfing setup and reintroduce selling momentum, with the 0.8100 support level in focus.
A more pronounced decline could then challenge the April 21 year-to-date (YTD) low at 0.8083, a critical level that has held as a base in the current downcycle. Should this be broken, bears could eye the psychological 0.8000 level, a round number that typically serves as a strong psychological floor due to its whole-number significance.
US Dollar Catalysts: JOLTS Data and Treasury Yields
Fundamentally, the USD/CHF rally has been supported by better-than-expected JOLTS job openings, signaling sustained tightness in the US labor market. Markets interpreted the data as evidence that the Federal Reserve may delay rate cuts longer than previously anticipated, causing US Treasury yields to rise and lending additional support to the Dollar Index (DXY).
Stronger yields tend to make the US Dollar more attractive compared to low-yielding currencies like the Swiss Franc, especially when risk sentiment is neutral or improving. The Franc, traditionally seen as a safe-haven currency, often underperforms in risk-on conditions or when US macro data surprises to the upside.
Market Sentiment and Momentum Indicators
Looking at momentum oscillators, the Relative Strength Index (RSI) on the daily chart is bouncing from near-oversold conditions, currently at 42, suggesting that bearish momentum may be waning. Additionally, MACD histogram bars are shrinking and threatening to flip above the zero line, potentially indicating a shift in momentum if confirmed.
However, until a break above the 50-day SMA at 0.8351 occurs, the downtrend remains in control. Traders may therefore remain cautious, viewing rallies as corrective, unless stronger confirmation develops.
Summary: Bullish Attempt Within a Bearish Structure
To summarize, USD/CHF is staging a technical recovery after touching its lowest level in six weeks, propelled by solid US economic data and a broadly firmer US Dollar. The formation of a bullish engulfing candlestick points to a potential move toward 0.8347, but the overall trend remains bearish while the pair stays below the 50-day SMA at 0.8351.
Short-term traders may look for a break and daily close above this key resistance to confirm a reversal, with upside targets at 0.8400 and 0.8475. On the other hand, a failure to hold above 0.8200 would shift focus back to 0.8100, the YTD low at 0.8083, and the psychological 0.8000 level, reinforcing the broader bearish bias.
As always, continued monitoring of US macroeconomic indicators, Swiss National Bank policy cues, and global risk sentiment will be critical to anticipating the next directional move in USD/CHF.
