USD/CHF Price Forecast: Bearish Flag formation warrants more downside below 0.7790

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The USD/CHF pair trades 0.15% lower at around 0.7825 during the European trading session on Friday. The Swiss Franc pair faces selling pressure as optimism towards a permanent ceasefire between the United States (US) and Iran has diminished the appeal of safe-haven assets.

USD/CHF rises to near 0.7825 as Iran truce optimism has diminished the US Dollar’s safe-haven demand.
US President Trump has stated multiple times that Washington is close to reaching a deal with Iran.
The Fed is unlikely to raise interest rates this year.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 98.08. The DXY is close to its over six-week low of 97.83 posted on Thursday.

The hopes of an Iran truce remain firm as US President Donald Trump has stated multiple times that Tehran is eager to reach a deal soon. On Thursday, Trump said in a press briefing, “We're very close to a deal with Iran,” while warning that military actions against Tehran would resume if a deal is not closed. Trump added that Iran is willing to give up its enriched uranium and surrender its plans to pursue nuclear ambitions.

On the domestic front, traders have completely pared hawkish Federal Reserve (Fed) for the year, as capped oil prices due to Iran truce optimism have again anchored inflation expectations globally.

USD/CHF technical analysis

USD/CHF trades lower at around 0.7825 as of writing, keeping a bearish near-term tone as it holds below the 20-period exponential moving average (EMA) at 0.7883. On the daily chart, the pair exhibits a Bearish Flag formation, which warrants the continuation of the downside trend after a period of consolidation.

The Relative Strength Index (14) at around 42 leans to the weak side and hints that rebounds may continue to struggle beneath overhead supply.

On the downside, the channel bottom around 0.7798 is the first line of support, and a clear move below that floor would expose a deeper retracement within the broader bearish structure defined by the longer-term downward trend line towards the March 10 low of 0.7748, followed by the February 23 low of 0.7710.

Looking up, initial resistance emerges at the channel top near 0.7850, followed by the 20-period EMA at 0.7883; a sustained break above these levels would be needed to ease immediate downside pressure and extend the recovery towards the April 13 high of 0.7934.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar FAQs

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

How do the decisions of the Federal Reserve impact the US Dollar?

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

What is Quantitative Easing and how does it influence the US Dollar?

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

What is Quantitative Tightening and how does it influence the US Dollar?

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.