USD/CHF: PMI Blowout Tests Bearish USD Conviction

• USD/CHF remains orderly despite market volatility
• PMI blowout trims Fed cut expectations
• Bearish USD conviction tested

Summary

USD/CHF has stayed remarkably orderly as volatility ripped through other markets. With US data delayed and a PMI blowout beating every forecast trimming Fed cut bets, bearish USD conviction is now being tested.

USD/CHF: Calm and Respectful

You have to give it to USD/CHF. Given the carnage and volatility seen across other asset classes over the past two sessions, including other supposed safe havens, the price action has been relatively controlled and respectful of known levels. That has provided traders with something close to a usable blueprint for assessing setups based on price action and signals as they emerge.

With news that a partial US government shutdown will delay Friday’s nonfarm payrolls report, along with the JOLTS survey for December that was due on Tuesday, known event risk over the coming days has been significantly reduced. That puts extra emphasis on price action unless we see a major surprise from the Treasury’s quarterly refunding announcement or other second-tier releases capable of impacting rate differentials, the long-time driver of USD/CHF direction.

Of those events that remain, Wednesday’s ISM non-manufacturing PMI is likely to attract the most attention. That reflects not only its coverage of the economically important services sector, but also the huge upside surprise seen in the manufacturing PMI released on Monday.

Start of Something Significant?

U.S. manufacturing activity expanded for the first time in a year in January, with the ISM PMI jumping to 52.6 from 47.9 in December, the strongest since August 2022 and above every single economist forecast. The headline beat was driven by new orders, which surged to 57.1 from 47.4, the highest since February 2022. Price pressures also remained sticky, with the prices paid index edging up to 59.0 from 58.5, reinforcing that goods inflation linked to tariffs and supply chain disruptions persists.

Source: TradingView

The data saw Fed funds futures trim rate cut expectations, with 2026 pricing sliding from 54 basis points to just 47. That provided a boost to the US dollar, building on the rebound seen Friday following Kevin Warsh’s nomination as the next Federal Reserve chair. If the services sector were to record a similar jump to manufacturing, it would strengthen the case that the improvement marks the start of a broader upswing, potentially shifting directional risks for the USD higher.

USD/CHF Rebound Builds

Source: TradingView

Looking at USD/CHF on the daily timeframe, there are early signs directional risks may be skewing higher. After trading beneath the lower Bollinger band late last week, with RSI (14) near 20 and MACD at its most negative since July 2025, the rebound over the past two sessions has been swift given the shift in USD tone. Friday’s engulfing candle was followed by another strong bullish candle on Monday, pushing the pair back towards the lower boundary of the range it traded in prior to the Greenland-inspired breakdown in late January.

If the bullish retracement extends, the September 17 low at 0.7830 is the first immediate topside level to watch, with 0.7873 also important after repeatedly prompting bounces in the final quarter of 2025. A break above the latter would improve the odds that what is still a corrective move evolves into something more meaningful. Should the bounce fade near term, 0.7731 is a minor level that saw some price action last week, while the multi-decade low at 0.7606 remains the key downside level.

RSI (14) and MACD both point to fading downside momentum. RSI is rebounding towards 50 from oversold conditions, while MACD is curling back towards the signal line while remaining in negative territory. The message is therefore more neutral than outright bearish in the near term. From a longer-term perspective, with key moving averages still trending lower, USD/CHF remains a sell-on-rallies candidate if higher levels are seen.