USDCHF Climbs on Fed-SNB Policy Split as US PPI Cools and SNB Signals Steady Rates

USDCHF trades higher on policy divergence between the Fed and the SNB. It hits an intraday high of 0.79918  and is currently trading around 0.79792.

The US Producer Price Index (PPI) for August 2025, released on September 10, 2025, at 8:30 AM ET, unexpectedly dropped 0.1% month-over-month against forecasts of a 0.3% rise, with annual headline PPI falling to 2.6% from 3.3% expected and core PPI declining to 2.8% versus 3.5% projected, driven by a 1.7% plunge in trade services margins. This cooling in wholesale inflation, following July’s 0.9% surge, sparked a positive market response, with S&P 500 and Nasdaq futures rising, gold climbing above $3,650, and bond yields dropping as expectations for a Federal Reserve rate cut at the September 17-18 meeting grew, supported by weak employment data. The report, ahead of the critical Consumer Price Index release on September 11, suggests moderating inflationary pressures, though economists urge caution due to the volatile trade services component, with the Fed likely to balance both datasets to navigate economic stimulus and inflation control.

The US Producer Price Index (PPI) for August 2025, issued on September 10, 2025, at 8:30 AM ET, showed an unexpected 0.1% month-over-month drop, contrary to expectations of a 0.3% increase. From an expected 3.3%, the annual headline PPI dipped to 2.6%, marking a considerable cooling from July's 0.9% rise. Core PPI fell to 2.8% vs. a projection of 3.5%. The 1.7% drop in trade services margins drove the sharp fall, which emphasized instability in wholesale and retail profit margins and final demand. Goods showed some mixed results with commodity price changes.

At the Ticino Bankers' Association in Vezia on September 10, 2025, in his address "Communication – an important element in fulfilling the SNB's mandate," Chairman of the Swiss National Bank Martin Schlegel stressed the essential part of communication in the SNB's monetary policy, unchanged since 1999, which targets 0–2% inflation, uses Medium-term projections and implementation of policy through the SNB rate seek to control market expectations and guarantee democratic accountability. Noting a high threshold for reintroducing negative interest rates because of acknowledged economic instability from 39% US tariffs on Swiss imports and their influence on savers and pension funds, markets anticipate stable rates at the Meeting on September 25, as of August 2025, inflation has been inside the target for three straight months.

Technical Analysis Points to Further Downside

The pair is trading above the   55-EMA, below the 200 EMA, and 365 EMA on the 1-hour chart, indicating a mixed trend. The immediate resistance is at  0.8000; any break above targets  0.8070/0.8090/0.8135/0.8170/0.8215/0.8250.

Support Levels and Potential Declines

On the downside, near-term support is around 0.7960; any violation below will drag the pair to 0.7920/0.7860/0.7800.

Indicators (1-hour chart)

CCI (50) - Bullish

Directional Movement Index -  Bullish

Trading Strategy Recommendation

It is good to buy on dips around 0.7950 with SL around 0.7920 for a TP of 0.8070.