USDCHF hits highest since May 2025 after SNB holds rates

As widely anticipated, the Swiss National Bank kept its policy rate at 0%. The central bank nudged up its inflation projections, yet it sees inflation averaging only 0.8% in both 2027 and 2028. Recent inflation gains have been driven by higher energy costs, while the SNB anticipates only a modest rise in medium-term price pressures. For now, the bank has little incentive to join the Fed in tightening monetary policy. (snb.ch)

The SNB also altered its communication regarding the Swiss franc. The June statement's phrase about an "increased willingness" to intervene was removed. The new wording says the bank is "willing to be active" as needed. While intervention remains possible, the shift implies reduced concern over franc strength. Following the announcement, the franc depreciated, with EURCHF climbing from roughly 0.9380 to 0.9420. (snb.ch)

The fundamental backdrop for USDCHF tilts in favor of the US dollar: the SNB maintains a zero rate while the Fed has signaled possible further rate increases. Elevated US yields can boost the appeal of dollar-denominated assets over franc-denominated ones. This explains the recent price action, but it does not provide traders with entry points or where the bullish scenario might falter.

Buyers held a crucial support zone.

On the daily timeframe, USDCHF fell on Monday and Tuesday but attracted buyers inside a swing zone spanning 0.81706 to 0.82148. Within that zone lies the 38.2% Fibonacci retracement of the drop from the January 2025 peak to the January 2026 trough, at 0.82116.

When multiple technical levels converge in a single zone, traders typically focus more on that area. Here, buyers had a clear reference point: if support held, they could anticipate a bounce; if it broke lower, they would have cause to reconsider their positions.

Support proved resilient. A sharp increase in US yields the previous day then drove USDCHF above the swing zone's upper boundary at 0.82148. Subsequently, the pair surpassed its earlier September peaks around 0.8265, giving buyers increasing command.

What lies ahead for USDCHF?

The immediate upward objective is the high from late May 2025, around 0.8348. A decisive break above that level would bring the 50% retracement of the decline from the January 2025 peak into view. That would represent another test of whether buying momentum can be sustained.

To the downside, a return below 0.82116 would serve as an early signal that the breakout is weakening. A decline beneath the swing zone's low at 0.81706 would constitute a more significant change: buyers who had used that support as a base would lose that technical foundation. These levels allow traders to gauge risk without solely depending on the central bank narrative.