USD/CHF has extended its decline, marking a nearly 1.9% drop from its November highs as the pair tests critical uptrend support established in September. This move comes ahead of the much-anticipated U.S. Non-Farm Payrolls (NFP) report, setting the stage for potential market shifts.

Technical Overview: Key Support and Resistance Levels

USD/CHF has entered a critical zone, approaching the lower boundary of a multi-month uptrend. The short-term focus remains on whether this support will hold or give way to further declines.

• Immediate Support: Found at the recent low near 8794, with additional levels at 8758 and 8726/34. This latter range aligns with the 100% extension of the recent decline and the 38.2% retracement of the September advance, marking a potential inflection zone. A decisive break below the yearly 38.2% retracement at 8698/99 would signal a more significant bearish trend reversal.
• Initial Resistance: Positioned at 8821/26, defined by the 200-day moving average and key historical levels, with stronger resistance at 8865. A breach above the 61.8% retracement at 8900 would confirm a resumption of the September uptrend, targeting higher levels at 8988 and 9042/45.

Chart Insights

USD/CHF is trading within a descending pitchfork structure from the November highs, with the median line just below last week’s low. The pair’s reaction at this level will be pivotal. A close below the median line could accelerate the downside move toward deeper support levels.

Conversely, a rally capped by the upper boundary of the pitchfork (~8865) would signal continued pressure within the bearish framework.

Fundamental Catalysts: Key Event Risks

The upcoming U.S. NFP report will likely dictate the short-term trajectory for USD/CHF. Expectations of a 200K increase in payrolls could provide clues on Federal Reserve policy, impacting the U.S. dollar. Additionally, the Swiss National Bank’s interest rate decision next week adds another layer of potential volatility.

• Bullish Scenario: A robust NFP print could revive USD demand, pushing USD/CHF higher and challenging resistance levels.
• Bearish Scenario: Weaker U.S. labor data or dovish Fed expectations could deepen the pair’s decline, with a focus on support at 8726/34.

Trading Strategy and Outlook

Traders should watch for a decisive reaction at the current uptrend support. The pair’s ability to hold this level will determine whether a corrective rally or a deeper decline unfolds.

• Bearish Bias: Focus on resistance at 8865; rallies limited to this level suggest further downside risks.
• Bullish Breakout: A sustained move above 8900 is needed to confirm a resumption of the broader uptrend.

Bottom Line

USD/CHF’s short-term outlook hinges on its response to uptrend support and upcoming economic data. With critical U.S. and Swiss events on the horizon, volatility is expected to remain high. Traders should stay nimble and monitor key technical levels and economic releases closely for guidance.