SoFi CEO enters prepaid forward contract on 1.5 million shares
Tariff pain is coming for Switzerland, but the bigger FX story remains the softening US outlook. EUR/USD is extending gains, while USD/CHF looks to have topped out for now.
- USD/CHF turning bearish despite Swiss tariff hit.
- EUR/USD builds on bullish breakout above downtrend.
- US data and Fed speakers in focus for next move.
EUR/USD, USD/CHF Summary
A last-ditch trip to Washington by Swiss President Keller-Sutter failed to precent a 39% US tariff being applied to Swiss exports. But despite the economic hit, USD/CHF has come under pressure following a soft US payrolls report and a wave of dovish Fed commentary. The pair completed a bearish evening star reversal on Friday, shifting the bias to selling rallies.
EUR/USD has followed through on its own bullish morning star pattern, breaking above trend resistance to retest 1.1665. With momentum building for both the euro and franc, upcoming US data and Fed speeches will be key for the next directional move.
Swiss Miss on Tariffs
A last-minute trip to Washington by Swiss President Keller-Sutter on Wednesday failed to stop a 39% US tariff on Swiss exports. The visit was arranged after President Donald Trump unexpectedly hiked the planned rate last week, escalating tensions with the European nation.
Keller-Sutter met with Secretary of State Marco Rubio but not Trump or key trade officials. She had proposed a 10% rate, but the offer was knocked back as Washington pushed to shrink its trade deficit. A big factor behind the recent blowout in the deficit was the repatriation of Swiss gold, triggered by fears US tariffs would be applied.
Claims, Bond Auction, Fedspeak in Focus
Despite the looming economic hit, it’s been the US economic outlook that’s been far more influential on broader FX markets recently with last Friday’s July nonfarm payrolls sparking a big reversal in the US dollar.
A torrent of dovish commentary from Fed officials in the period since, including from Governor Lisa Cook on Wednesday who described the jobs report as “concerning” and “typical of turning points”, has added to downside pressure on the dollar not only against the franc but other European currencies, including the euro.
Source: TradingView
Given the sensitivity of the FX universe to the US interest rate outlook, it puts Thursday’s jobless claims data, and auction of 30-year US Treasury bonds, along with speeches from FOMC members Alberto Musalem (2025 voter) and Raphael Bostic (2025 non-voter), at the top of the list of known risk events for traders to monitor over the remainder of the week.
Trump’s nomination for the vacancy left by Fed Governor Adriana Kugler following her abrupt resignation last Friday is another wildcard that could shift US short-end rates, hence the USD.
USD/CHF: Risks Skewing Lower?
Source: TradingView
You can see last Friday’s bearish reversal on the USD/CHF daily chart which completed a three-candle evening star, a pattern often seen around market tops. While USD/CHF has not extended the bearish move, the price and momentum picture is quickly shifting from bullish to neutral-bearish when it comes to an directional bias. If I had to choose one or the other, the preference would now be to sell rallies rather than buy dips.
Nearby resistance is located at .8112 and .8150, the latter a particularly important level. As for support, dips towards .8025 were bought over the past fortnight. If that level were to give way, .7950, .7920 and the July 1 swing low of .7873 are levels to watch.
EUR/USD Rebound May Have Legs
Source: TradingView
Given the tight correlation both have against the US dollar over longer timeframes, it comes as little surprise that the technical picture for EUR is similar to CHF, only inverse. You can see the completion of a three-candle morning star pattern last Friday following the payrolls report.
Unlike USD/CHF which has been unable to go on with the move, EUR/USD has this week, breaking above the downtrend running from the July highs before pushing through minor resistance at 1.1600 on Thursday, sparking a bullish run back to 1.1665 resistance.
If that is broken in the coming days, 1.1720, 1.1788 and 1.1832 are the levels to watch on the upside, as is the long-running trend line broken in late July, found around 1.1730 today. If 1.1665 holds, 1.1600 may now flip to offering support.
With RSI (14) trending higher and above 50 with MACD on the cusp of crossing the signal line from below, the momentum picture is shifting neutral to mildly bullish, favouring a similar directional bias.