USDCHF – Swiss Franc Weakens Following SNB’s 0.25% Rate Cut

USDCHF surged by approximately 0.7% on Thursday following the SNB’s 25 basis points rate cut, reducing the interest rate from 1.5% to 1.25%.

The central bank justified its decision by citing the ongoing decline in inflation and the pickup in economic growth. This newfound strength is enhancing the daily chart outlook with an initial signal of a potential reversal pattern forming. Bulls have breached the initial resistance at 0.8905 (200DMA / Fibo 23.6% of 0.9158/0.8826 bear-leg), with a close above this level needed to confirm the reversal signal and pave the way for further recovery. The next targets are expected to be at 0.8953 (Fibo 38.2%) and 0.8976 (a strong barrier provided by the base of the thick daily cloud).

Daily studies remain mixed and require more upward movement to shift to a bullish stance. There is caution on the potential failure to clear the 200DMA, which would keep the downside risk in play. However, a bear-trap pattern is forming on the weekly chart, which may support the action if there is a weekly close above the cracked Fibo support at 0.8883 (38.2% of 0.8332/0.9224).

Res: 0.8915; 0.8953; 0.8976; 0.9000
Sup: 0.8883; 0.8852; 0.8826; 0.8778