USD/CHF has receded beneath 0.8650 as the U.S. Dollar wanes, prompted by a retreat in Treasury yields.

FUNDAMENTAL OVERVIEW:

• USD/CHF Weakens: The USD/CHF pair has softened as the U.S. Dollar succumbs to declining Treasury yields.
• Political Landscape Adds Uncertainty: Current polling reveals a close contest between Kamala Harris and Donald Trump in pivotal swing states, further fueling market apprehension.
• Swiss Bond Yield Decline: The yield on the 10-year Swiss bond edges lower, nearing 0.38%, as speculation intensifies regarding assertive rate reductions from the Swiss National Bank (SNB).

USD/CHF has pulled back from its recent peak, hovering close to 0.8630 during Monday’s European session. The U.S. Dollar remains subdued as Treasury yields fall in response to a weaker-than-anticipated Nonfarm Payrolls report from Friday, dampening forecasts for robust monetary tightening. The U.S. Dollar Index (DXY), tracking the greenback against six primary currencies, stands near 103.80. U.S. Treasury yields also maintain equilibrium, with the 2-year yield at 4.17% and the 10-year yield at 4.31% at this moment.

The U.S. Bureau of Labor Statistics (BLS) disclosed that Nonfarm Payrolls in October advanced by a modest 12,000, a marked deceleration from September’s revised 223,000 gain (downgraded from an initial 254,000) and well below the market’s projection of 113,000. Meanwhile, October’s Unemployment Rate persisted at 4.1%, aligning with consensus estimates.

Traders are closely watching Tuesday’s U.S. presidential election, as the final New York Times/Siena College poll highlights a neck-and-neck race between Democratic candidate Kamala Harris and Republican nominee Donald Trump across seven pivotal states. Focus will soon shift to the Federal Reserve’s impending policy decision, where the market largely anticipates a restrained 25-basis-point rate cut later this week.

The 10-year yield on Swiss government bonds has dropped toward 0.38%, reaching its lowest threshold since early October, as anticipations grow for more substantial rate cuts from the Swiss National Bank (SNB). This outlook is underscored by Switzerland’s continued inflationary slowdown, with the Consumer Price Index (CPI) contracting by 0.6% year-over-year in October, falling short of the anticipated 0.8% and marking the slowest increase since July 2021.

READ MORE – DAILY TECHNICAL ANALYSIS BY CAPITAL STREET FX

USD/CHF TECHNICAL ANALYSIS – DAILY CHART:

Technical Overview:

USD/CHF is currently traversing an upward channel. The pair is positioned beneath all key Moving Averages (SMA). The Relative Strength Index (RSI) lies within the Selling Zone, and the Stochastic oscillator signals a Negative trend.

• Immediate Resistance Level: 0.8665
• Immediate Support Level: 0.8625

HOW TO TRADE USD/CHF:

Following a descending trajectory, USD/CHF has now entered a consolidation phase. A notable upward breakout has ushered in a fresh upward trend, though the pair has since encountered resistance and is trading near a vital support level. Should this support prove resilient, the upward trajectory may persist. Conversely, a breach below this level could pave the way for a descent towards the primary support zone.

• Trade Suggestion:
  • Action: Stop Sell
  • Entry Price: 0.8619
  • Take Profit: 0.8558
  • Stop Loss: 0.8664