USDCHF Market Update – May 21, 2025

Summary

• Support & Resistance:
  • Resistance: 0.8456
  • Support: 0.8220
  • The pair is trading below key resistance at 0.8456. A break above this level would suggest renewed bullish momentum. Conversely, a drop below 0.8220 would reinforce bearish sentiment.
• Chart Pattern:
• A potential bullish reversal pattern is forming, backed by rising buying volume and a breakout from a recent downtrend. A confirmed close above 0.8285 could trigger further upside toward 0.8456 and beyond.

Fundamental Factors Affecting USDCHF

• U.S. Outlook:
  • Moody's downgrade of U.S. credit from Aaa to Aa1 has intensified concerns over fiscal stability, citing the ballooning $36 trillion debt and persistent deficits.
  • This triggered a sell-off in U.S. Treasuries, sending 30-year yields above 5%—their highest in 18 months—resulting in downward pressure on the U.S. dollar.
• Federal Reserve Policy:
  • Fed officials, including Alberto Musalem (St. Louis) and Raphael Bostic (Atlanta), emphasized a wait-and-see approach to rate changes, reflecting a dovish tone weighing USD strength.
• Swiss Outlook:
  • The Swiss National Bank (SNB) has held its policy rate at 1.75%, reinforcing its commitment to curbing inflation.
  • Switzerland's economic resilience and the SNB's proactive stance continue to support CHF strength, making USDCHF sensitive to diverging policy trajectories.

Key Takeaway for Traders

USDCHF remains under pressure from a weaker USD backdrop driven by U.S. fiscal concerns and a dovish Fed. Meanwhile, SNB's steady policy and Switzerland's economic stability support CHF strength. A bullish reversal is possible if the pair breaks above 0.8285, targeting 0.8456. However, failure to hold above 0.8220 could reintroduce downside risk. Watch for U.S. data surprises and SNB policy comments for trade cues.

USDCHF – H4 Timeframe

Despite the double bullish break of structure on the 4-hour timeframe chart of USDCHF, we see that price has presented two zones that feature the SBR reversal pattern. This is, however, not a cause for confusion, as in this case, we can simply look for bullish confirmation criteria on the lower timeframe charts. The lower demand zone is preferable since it affords a better price inducement while fronting a prominent Fair Value Gap.

Analyst's Expectations: 

Direction: Bullish

Target- 0.84948

Invalidation- 0.80389

CONCLUSION

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