21.05.202518:38 Forex Analysis & Reviews: USD/CHF. Analysis and Forecast

For the third consecutive day, the USD/CHF pair continues to lose ground. The fundamental backdrop suggests that the path of least resistance remains to the downside.

The pair has been declining for three days in a row. The fundamental environment indicates that the most probable direction for the pair continues to be downward. U.S. fiscal challenges, which recently led to the unexpected downgrade of the U.S. government's sovereign credit rating last Friday, have kept selling pressure on the U.S. dollar intact. Additionally, expectations that the Federal Reserve will further cut interest rates this year—due to signs of easing inflationary pressures and weak growth prospects—are pushing the dollar even lower. At the same time, renewed demand for safe-haven assets is supporting the Swiss franc, placing additional downward pressure on the USD/CHF pair.

Recent optimism surrounding a trade truce between the U.S. and China quickly faded after the U.S. issued guidance advising companies to avoid using Huawei Ascend AI chips. In response, China accused the U.S. of abusing export control measures, stating that the Trump administration is violating the Geneva Trade Agreements. China's Ministry of Commerce also emphasized that U.S. actions toward advanced chips represent unilateral intimidation and protectionism. These developments have heightened concerns over a further deterioration in trade relations between the two countries, increasing demand for safe-haven assets.

There are no major economic data releases scheduled for Wednesday that could significantly move the market. As a result, the U.S. dollar's performance will largely depend on speeches from key FOMC members. In addition, trade-related headlines will influence overall risk sentiment and demand for safe-haven assets, creating further short-term trading opportunities in the USD/CHF pair. Nevertheless, the current fundamental backdrop continues to favor further downside for the pair.

From a technical perspective, key support lies at the psychological level of 0.8200. A break below this level could accelerate the pair's decline. Moreover, oscillators on the daily chart remain in negative territory, suggesting that the path of least resistance for the pair remains downward.