The USD/CHF: A short-term bounce back cannot be ruled out – OCBC

The USD/CHF rebounded overnight from its several-week lows below 0.80. The pair recently stood at levels of 0.7975, according to OCBC currency analysts Frances Cheung and Christopher Wong.

USD/CHF could continue to be a sell on rebounds

"There were 2 comments from the president of the SNB Schlegel in a recent interview that are worth highlighting. First, he noted that the threshold is very high for reintroducing negative interest rates, given the detrimental effects on savers and pension funds. He emphasized that negative rates would only be considered in exceptional circumstances. With the current rate at 0, this suggests that policy easing is not on the table at the next meeting on September 25."

"Second, it was indicated that the franc has appreciated mainly against the dollar. In real terms, however, the appreciation is not as large as it seems at first glance. Such rhetoric implies less limit to the strength of the CHF and with the SNB reluctant to counteract the appreciation, USD/CHF could remain a sell on rallies! Especially if USD weakness persists."

"Slightly bearish momentum in the daily chart intact as the RSI rises from nearly oversold conditions. Bearish crossover observed with 21 cutting the 50-day moving average to the downside. Tendency to sell rallies. Resistance at 0.8020 (moving averages of 21 and 50 days, Fibonacci retracement of 50% from the July low to the August high), 0.8060 (Fibonacci 38.2%). Support at 0.7920 (recent low), 0.7870 (2025 low)."

How frustrating! This Swiss franc is causing more headaches than joys. Personally, I think the SNB is being too conservative - what is the purpose of a central bank if it is not going to intervene when it is obvious that the market is unbalanced?

The technical levels seem clear, but I wouldn't trust technical analysis much at this moment. With the political situation in the U.S. being completely chaotic and this imminent government shutdown, anything can happen. I've already seen too many "supports" and "resistances" break like they were butter.

And be careful with what Schlegel says - that guy always speaks ambiguously. He says that negative rates are only in "exceptional circumstances"... and what the hell qualifies as exceptional for them? The SNB has always been unpredictable.

What I am clear about is that as long as the dollar remains weak due to the American political circus, the CHF will continue to strengthen. It's pure logic - investors flee to safety when there is uncertainty, and few assets are as safe as the franc.