USD/CHF forecast: Bullish wedge keeps upside in focus ahead of payrolls

• Bullish wedge hints another leg higher
• Payrolls remain the key market catalyst
• Weak payrolls may trigger larger dollar swings
• Swiss inflation unlikely to trouble the SNB

Data takes centre stage

USD/CHF heads into Thursday's session with two major catalysts on the calendar. Swiss inflation may influence expectations for the Swiss National Bank, but US non-farm payrolls are likely to dominate given their importance for Fed pricing. With the pair sitting in a bullish technical structure, the focus is on whether the data can provide the catalyst for another leg higher.

Outside of its relationship with European currencies against the dollar, many of the traditional drivers of USD/CHF have offered little guidance recently. Quarter-end flows, the energy shock and renewed focus on Europe's energy security have muddied the waters, leaving historical relationships looking more like noise than signal. However, with payrolls capable of reshaping expectations for Fed policy, Thursday's report could see some of those traditional relationships, particularly interest rate differentials, reassert themselves.

Swiss CPI preview

The SNB's latest forecasts already point to inflation lifting just 0.6% in 2026, highlighting how little concern it has about price pressures. Ahead of Thursday's June CPI report, inflation is expected to rise just 0.1% in June, leaving the annual rate at 0.5%. If that's what we get, the need for the Swiss National Bank to tighten policy is simply not there. That's fighting yesterday's war.

It's also worth noting the run of downside inflation surprises we've seen worldwide recently. The Euro area's flash CPI report on Wednesday saw both the headline and core measures undershoot expectations by 0.2 percentage points. If Switzerland follows suit, it could amplify franc weakness as markets become even more comfortable with the idea that the SNB is going nowhere.

Payrolls to test hawkish pricing

Source: TradingView (US EDT)

US non-farm payrolls will be the dominant release of the session. Recent figures have delivered a string of upside surprises, so another strong payrolls print would likely provide an additional boost for the dollar.

Realistically, though, it's unlikely to be that simple. With the Fed's focus now firmly on inflation remaining above target, broader labour market conditions matter too. That puts the unemployment rate firmly in focus, along with the U6 underemployment rate given what it may signal about labour market slack and the potential for wage pressures to emerge following the inflation pulse from higher energy prices.

For USD/CHF, the strongest directional signal would likely come if payrolls and the unemployment rate surprise in the same direction. A sizeable payrolls beat alongside an unemployment rate below 4.3% would strengthen the case for further Fed tightening, likely sending the dollar off to the races. Conversely, if payrolls undershoot, unemployment ticks higher and wage growth softens, it would raise legitimate questions about the case for additional Fed tightening at a time when the labour market appears to be cooling.

With markets pricing 43 basis points of Fed tightening by the June meeting next year, the risks may be asymmetrically skewed heading into the release. Another strong report would likely provide an additional lift for the dollar, but a broad-based miss across payrolls, unemployment and wages could spark a far larger move in the opposite direction as traders unwind some of that hawkish Fed pricing at the front end of the US curve.

Bullish wedge takes shape

Source: TradingView

From a broader perspective, the technical picture remains bullish. USD/CHF continues to trade in a well-defined uptrend that has accelerated over the past couple of months. The pair is holding above its key medium and longer-term moving averages, all of which are now sloping higher. Adding to the bullish case, the 50-day moving average has recently crossed above the 200-day moving average, completing a golden cross.

More recently, price action has coiled into what appears to be a bullish wedge, a continuation pattern that suggests another leg higher may be brewing. If the pattern plays out, an initial break above 0.8140 would put 0.8150 into focus, followed by 0.8250.

Momentum is the only real concern for bulls. While RSI (14) remains comfortably above the neutral 50 level, it has backed away from recent highs. MACD also looks close to crossing below its signal line, although it remains firmly in positive territory. The broader technical picture still favours playing the pair from the long side, but momentum is no longer providing the same tailwind seen earlier in the trend.

If the pair were to reverse lower post payrolls, wedge support is the first level to watch. More importantly, attention would quickly shift to 0.8041. It capped rallies on several occasions before the recent breakout, raising the prospect it may now act as support. A break below would expose former resistance at 0.8013, followed by the uptrend from the late-May lows. Beyond there, the 200-day moving average in the low 0.7900s provides the next important support zone.