USDCHF Eyes Recovery Amid Strong Technical Confluence

Manuel

Forex

Central Bank

Summary:

If price stabilizes here, it could set the stage for a renewed bullish move toward the 0.8900 region.

BUY USDCHF

Close Time

CLOSED

0.87665

Entry Price

0.89800

0.86400

0.80322 -0.00133 -0.17%

43.9

Pips

Profit

0.86400

0.88104

Exit Price

0.87665

Entry Price

0.89800

The Federal Reserve has significantly lowered its growth projections for 2025, citing uncertainty surrounding the Trump administration’s inconsistent tariff policies. The frequent shifts in trade policy—often announced and reversed via social media—have weighed on economic confidence, prompting the Federal Open Market Committee (FOMC) to revise its GDP forecast for the end of 2025 down to 1.7%, a notable decline from the 2.1% estimate in December.

Despite this, the Fed’s latest dot plot suggests that interest rates will remain steady at 3.9% through 2025, broadly in line with previous expectations. In addition, the FOMC has decided to slow the pace of its balance sheet reduction starting in April. However, market participants continue to anticipate a rate cut, with interest rate futures pricing in a strong probability—now exceeding 60%—that the Fed will lower rates by 25 basis points in June. Fed Chair Jerome Powell acknowledged that policymakers remain attentive to signs of slowing economic activity and labor market conditions.

The Fed’s latest summary of economic projections reflects a divided outlook among officials. Out of 19 policymakers, nine expect rates to settle within the 3.75%-4.00% range by year-end. Meanwhile, four foresee just one rate cut, another four see no rate cuts at all, and two anticipate three rate reductions before 2026. Looking further ahead, the median forecast suggests an additional 50 basis points of easing by the end of 2026, bringing the policy rate to 3.4%.

Meanwhile, U.S. economic data continues to influence sentiment. Industrial production jumped 0.9% in February, marking a sharp acceleration from the upwardly revised 0.1% increase in January. The figure easily beat economists’ expectations of a modest 0.3% rebound. On an annual basis, manufacturing output rose 0.7%, signaling renewed momentum in a sector that accounts for 10.3% of the U.S. economy. The manufacturing industry has shown resilience since the Fed began easing its policy stance in September.

Swiss National Bank Poised to Cut Rates

On the other side of the Atlantic, the Swiss National Bank (SNB) is expected to cut its key policy rate by 25 basis points to 0.25% during its upcoming meeting on Thursday, according to a Reuters survey of economists. The consensus suggests that rates will remain at this level until at least 2026.

“The only real uncertainty regarding the SNB’s decision to keep rates unchanged at this meeting stems from the recent deterioration in the global growth outlook,” noted Claude Maurer, Chief Economist at BAK Economics in Basel. USDCHF Eyes Recovery Amid Strong Technical Confluence_1

USDCHF Eyes Recovery Amid Strong Technical Confluence_1

Technical Analysis

USD/CHF is approaching the critical 0.8766 support zone, an area that has previously acted as both resistance and support on multiple occasions. This time, it is serving as a key support level, increasing the probability of a bullish reaction from this region. Additionally, the 200-period moving average is converging in this zone, reinforcing its importance as a potential pivot level. A breakout above the moving average could confirm a continuation of the uptrend.

The Relative Strength Index (RSI) on the daily chart currently sits at 32, nearing oversold conditions. More importantly, there is a noticeable divergence compared to the local low at 0.8405. While the RSI is lower, price remains significantly above previous lows, indicating weakening bearish momentum. This divergence could attract buyers looking for early signs of a trend reversal.

Furthermore, the 0.8766 area aligns with the 50% and 61.8% Fibonacci retracement levels—common zones where pullbacks tend to find support before resuming their primary trend. If price stabilizes here, it could set the stage for a renewed bullish move toward the 0.8900 region. Conversely, a decisive breakdown below 0.8670 could open the door for further losses, signaling a deeper correction.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8765

Target price: 0.8980

Stop loss: 0.8640

Validity: Mar 28, 2025 15:00:00

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