USDCHF has surged from the midpoint of its 2024 range in the last few days, aided by a declining EURUSD. However, the overall outlook still favors the CHF. Swiss inflation remains way below the 2% target, and the momentum is still pointing downward despite recent rate cuts. This gives the Swiss National Bank (SNB) room to cut rates at least once more in 2024. Inflation is likely to remain low for the rest of the year, boosting the CHF. On the other hand, the USD is under downward pressure due to potential recession risks due to a possible rapid increase in unemployment (the Sahm Rule is at a key level), political uncertainty with upcoming elections, and anticipated rate cuts from the Federal Reserve. This fundamental backdrop has manifested in USDCHF as a downtrend channel since April. 

(USDCHF Daily Chart) 

The white, medium-term trend channel has been tested multiple times and is still ongoing. The most recent test was in early July. Since then, a shorter timeframe downtrend channel has formed, guiding the price toward the lower line of the white trend channel. In the last few days, USDCHF has received an upward reaction from the lower line of the red channel, supported by the midpoint of the 2024 moves. However, the fundamentals are still pointing downward for now, and the likelihood of the trend continuing is high. If there are no hawkish surprises from the FED, no significant positive surprises from U.S. jobs data, or no CPI surprises from Switzerland, USDCHF might start to move towards 0.87 in the coming days. However, a breakout from the red trend channel could indicate that recent upward moves might continue towards the main trend, potentially nearing 0.90. This week will be busy for traders.