GBP/CHF bearish targets as safe-haven franc appeal grows

Market Overview

The US Dollar continues to face mounting downside pressure as the first round of expanded US tariffs on imports from Canada, Mexico, and China officially takes effect. These tariffs, set at 25% for Canada and Mexico, and 20% for Chinese imports, have significantly escalated global trade tensions, sparking retaliatory actions from both Canada and China. Ottawa has imposed counter-tariffs targeting US agricultural products, while Beijing announced levies on key US exports, including energy and high-value industrial goods. This tit-for-tat environment has revived concerns over global supply chain disruptions, placing renewed downward pressure on the US Dollar.

At the same time, safe-haven flows into the Japanese Yen, Swiss Franc, and gold have accelerated as investors grow increasingly wary of a protracted trade conflict and its broader implications for global economic growth.

Technical Analysis

The GBP/CHF pair has extended its recent losses, with price action on the 4-hour chart confirming a decisive break below the two-month rising trendline, which had previously provided a strong technical floor. Sellers successfully pushed the pair below the former swing low at 1.13421, with price subsequently retreating towards the immediate support at 1.13181.

The momentum behind this downward move has been reinforced by converging bearish signals across key oscillators. The Relative Strength Index (RSI) has dipped further into bearish territory, remaining comfortably below the neutral 50 level, indicating that selling momentum is gathering pace. Similarly, the MACD histogram continues to print larger negative bars, while the signal line remains below zero, underscoring the prevalence of bearish sentiment.

For sellers to maintain control, they need to secure a confirmed daily close below the rising trendline and subsequently drive price beneath the 1.13181 support. A clean break of this level would validate the bearish continuation pattern, opening the door to further declines targeting 1.12876, followed by the more significant technical floor at 1.12539, which corresponds with the measured move projection from the broken trendline structure.

On the upside, should buyers manage to reclaim the breached trendline and defend the 1.13181 area, attention would shift back to resistance at 1.13421, which aligns with the previous breakdown point. A sustained push above this level would force a reassessment of the short-term bearish outlook, with further upside targets emerging at 1.13758 and 1.14303.

Key Technical Levels

• Resistance 1: 1.13421
• Resistance 2: 1.13758
• Resistance 3: 1.14303
• Support 1: 1.13181
• Support 2: 1.12876
• Support 3: 1.12539

Fundamental Drivers

The Eurozone’s stronger-than-expected labour market data adds further complexity, with falling unemployment bolstering confidence in the region’s resilience, potentially allowing the ECB to maintain a neutral policy stance for longer. This dynamic has increased relative demand for the Euro, contributing to a softer Dollar environment, particularly against the Swiss Franc.

Later today, John Williams’ speech will offer a key test for the Dollar’s near-term trajectory. Investors will closely dissect his tone, looking for any shift towards aligning Fed policy with the White House’s explicit preference for a weaker currency. Should Williams adopt a more cautious stance, signalling greater concern over trade risks, the Dollar could face renewed selling pressure, particularly if combined with softer-than-expected US labour data due later in the week.

Conclusion

The GBP/CHF pair remains under firm bearish pressure, with sellers aiming for support at 1.12876, while broader sentiment towards the Dollar weakens amid trade tensions and shifting Fed expectations.

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