USD/CHF, EUR/CHF: Charts warned of franc comeback before tariff talks

• Switzerland close to deal cutting U.S. tariffs to 15%
• Trump’s approval still needed to finalise agreement
• Talks described as “constructive” with new Swiss offers
• Technicals in USD/CHF and EUR/CHF point to franc strength

Summary

Switzerland’s push to secure a tariff cut from the U.S. has lifted optimism that trade tensions may soon ease, though the final call still rests with President Trump. Talks have been positive, with Bern offering new investments and market access to sweeten the deal. But FX markets were ahead of the news—USD/CHF and EUR/CHF had already been signalling that the franc was primed to strengthen, with technical setups confirming a shift in momentum.

Franc Strength Was Flashing Before the Headlines

Switzerland may soon reach a deal with the United States to cut tariffs on Swiss exports from 39% to 15%, possibly as early as this week. The move would reverse President Trump’s earlier tariff hike in August, which hit key Swiss industries like watches, machinery, and chocolate. A Swiss government source said progress had been made but stressed a final agreement still depends on Trump’s approval.

Talks between Swiss Economy Minister Guy Parmelin and U.S. Trade Representative Jamieson Greer were described as “very constructive,” with Switzerland offering new U.S. investments, defence purchases, and greater energy market access to help reduce America’s trade deficit. A recent meeting between Swiss business leaders and Trump also helped improve relations.

While the prospect of lower tariffs is supportive for sentiment, price action in USD/CHF and EUR/CHF had already been flashing early signs that the franc was at risk of strengthening well before this news hit the wires.

USD/CHF Evening Star set the Tone

 

Source: TradingView

The completion of a three-candle evening star bearish reversal pattern last week set the tone for USD/CHF in the period since, with declining U.S. short-dated interest rates helping to spark a sustained move lower. A string of former resistance levels were taken out in the process, starting with .8071, with the June downtrend and .8000 following soon after.

Now, the pair finds itself tangoing with the 50-day simple moving average, a level it often likes to test but with significantly fewer sustained crossings. It now looms as the key level to watch for anyone considering USD/CHF setups, allowing for entry on one side with a stop on the other depending on how the price interacts with it on this occasion.

The story from RSI (14) and MACD is one of shifting momentum, with the former already trending lower beneath 50 while the latter has crossed the signal line from above and is rolling over towards negative territory. It’s not an outright bearish signal yet, but the warning signs for bulls are there that the bearish move may have legs yet.

Should USD/CHF trade beneath the 50-day moving average and hold there, shorts could be initiated beneath the level with a stop above to protect against the threat of reversal. .7912 and .7830 loom as potential targets. If the pair were to reverse back above the 50DMA, the setup could be flipped with longs set above with a stop below, targeting either .8000, the June downtrend, or .8071 resistance.

 

 

EUR/CHF Rallies Rejected

Source: TradingView

Like USD/CHF, the price signals were clear as day for EUR/CHF last week that directional risks may be shifting lower, with the pair constantly rejected on bullish probes above the 50DMA up to resistance at .9325. Five failed breakout attempts eventually saw bulls give up, resulting in the large unwind seen in recent days. The bearish reversal saw former resistance at .9289 and .9268 taken out, leaving the pair now dangling midway between the latter and key support at .9211.

The message from RSI (14) and MACD is one of building downside strength. RSI is trending lower beneath 50 but not yet in oversold territory. MACD looks like it’s about to confirm the signal, reading for a possible bearish crossover. That favours short setups over longs, although the location of the pair between two known levels makes entering bearish trades right now screen as a low-probability play.

The preference would be to see a push back towards .9268, allowing for shorts to be established beneath with a stop above, targeting .9240 initially where the pair bounced on Wednesday, with .9211 the option after that. As covered in a separate note last month, the latter has often sparked savage bounces over recent years, so price action at the level will be especially important for traders to monitor.