USD/JPY, USD/CHF: Dollar bulls eye breakout as payrolls loom

• Fed rate cut expectations drop to 28.5bp, lowest since February
• USD/JPY breakout above 200DMA eyes 151 resistance
• USD/CHF pressing .8150 with bullish momentum
• Payrolls, unemployment rate and wages key for next move

USD/JPY, USD/CHF Outlook Summary

Upside risks for USD/JPY and USD/CHF flagged last Friday have played out nicely, with both extending their rebound, hitting multi‑month highs in the process. A continued repricing of Fed rate cut expectations remains a strong influence, fuelling U.S. dollar upside. With both pairs testing known resistance levels, it provides a variety of setups for traders to consider ahead of the key U.S. nonfarm payrolls report for July later in the session.

Fed Rate Cut Pricing Evaporates

On the back of continued economic resilience and hawkish tone from Federal Reserve chair Jerome Powell after this week’s FOMC meeting, expectations for rate cuts this year have dwindled, falling to just 28.5 basis points, according to futures, the least since February. At the start of July, traders were flirting with the idea of the Fed cutting rates three times before 2026; now it’s down to just one.

Source: TradingView

The unwind in dovish pricing has been a factor behind the rebound in the U.S. dollar in July, including against the Japanese yen and Swiss franc. You can see that in the bottom panes of the charts below, showing the correlation coefficient between USD/JPY and USD/CHF with 2025 Fed rate cut pricing over the past month. As the amount of easing has fallen, it has often coincided with gains in both pairs.

USD/JPY Surges Above 200DMA

Source: TradingView

Looking at USD/JPY from a technical perspective, it delivered an important bullish breakout on Thursday, surging above the 200‑day moving average for the first time since February. The pair now finds itself trading just below 151 resistance, providing an ideal level to build setups around depending on the detail in the nonfarm payrolls report.

If the report comes out strong, the pair may push above 151, allowing traders to buy the break with a stop beneath the level for protection against reversal. 152.40 and the February swing high of 154.80 stand out as potential targets, depending on the desired risk‑reward of the trade.

Alternatively, if the payrolls report whiffs, it may spark a reversal in USD/JPY, allowing shorts to be set below 151 with a stop above for protection. The 200‑day moving average screens as an initial target, with 149.00 and 147.95 other options after that.

Momentum indicators are bullish with RSI (14) and MACD trending higher in positive territory without being overly stretched, favouring buying dips and bullish breaks.

USD/CHF Bumping Up Against Resistance

Source: TradingView

The picture from the USD/CHF chart is not dissimilar to USD/JPY, with the pair knocking on the door of resistance at .8150 heading into payrolls.

If the report impresses, it may be enough to push the pair above .8150, putting .8250 and .8333 on the radar as potential targets. A stop beneath .8150 would provide protection against reversal.

If payrolls disappoint, the setup could be flipped, with shorts established beneath .8150 with a stop above for protection, targeting the 50‑day moving average or .8058 support initially.

RSI (14) is trending higher, pushing further into bullish territory. MACD has also squeezed into positive territory having crossed the signal line beforehand, providing a combined picture of strengthening topside momentum. That too favours buying dips and bullish breaks.

Unemployment > Payrolls

Source: TradingView

As for the areas to look out for in the payrolls report, the unemployment rate remains the key figure when it comes to Fed rate cut pricing, with an increase to 4.2% expected. The payrolls figure is also important, especially if it confirms the signal from the unemployment rate. It’s expected to show an increase of 110,000. Given the linkages to services inflation, average hourly earnings can also be influential, with an expected 0.3% increase set to see the annual rate reaccelerate to 3.8%.