USD/CHF Teeters as Swiss Deflation Deepens: Breakout or Breakdown Ahead?

USDCHF is consolidating after forming a minor top at 0.80679. It hit a low of 0.80234 yesterday and is currently trading around 0.80508.

With a 0.1% month-over-month price drop matching the market, Switzerland's Consumer Price Index (CPI) for August 2025, published on September 4, 2025, showed persistent deflationary pressures. Expectations and a year-over-year inflation rate remain unchanged at a low 0.2%, the same as July. Excluding volatile items, core inflation fell 0.1% monthly as well; annual core inflation decreased to 0.7% from 0.8%, much lower than the historic mean of 2.27% (1956–2025). This data emphasizes a difficult disinflationary environment driven by a strong Swiss franc, weak domestic demand, and sector-specific deflation, hence spurring a gain in EUR/CHF as Given worries about economic expansion and ongoing deflationary dangers, markets expect the Swiss National Bank to keep its policies accommodating.

Technical Analysis Points to Further Upside

The pair is trading above the   55-EMA,  below the 200 EMA and 365 EMA on the 4-hour chart, indicating a mixed trend. The immediate resistance is at  0.8070; any break above targets  0.8090/0.8135/0.8170/0.8215/0.8250.

Support Levels and Potential Declines

On the downside, near-term support is around 0.8020; any violation below will drag the pair to 0.8000/0.7980/0.7920/0.7860/0.7800.

Indicators (4-hour chart)

CCI (50) - Bullish

Directional Movement Index -  Neutral

Trading Strategy Recommendation

It is good to buy on dips around 0.8038-40 with a stop-loss at 0.8000 for a TP of 0.8130.