The CHF/JPY currency pair continues to show long-term strength as the fundamental landscape, market sentiment, and technical structure align in favour of the Swiss franc. With the Bank of Japan maintaining its ultra-loose monetary policy and the Swiss National Bank signalling caution but with firmer inflation control, the outlook for CHF/JPY remains bullish. This article provides a detailed multi-factor analysis of the trade idea to buy CHF/JPY.

Fundamental Analysis

Monetary Policy & Inflation:
The Swiss National Bank (SNB) surprised markets by cutting interest rates to 1.25% in March 2025, but importantly, this action was pre-emptive. Swiss inflation remains subdued at 0.0% YoY, but the SNB is signalling that deflationary risks are not deeply entrenched. In contrast, the Bank of Japan (BoJ) remains firmly dovish. Despite inflation sitting at 3.6% YoY, the BoJ has chosen not to tighten policy, instead reducing GDP forecasts and highlighting the fragile nature of domestic demand.

The net result is that policy divergence remains intact, with Japan deeply accommodative and Switzerland perceived as neutral with room to tighten if necessary. The yield differential continues to support CHF.

Growth Outlook:
Swiss GDP growth has stabilised at 0.2% quarterly, reflecting resilience despite weak global conditions. Meanwhile, Japan’s quarterly GDP of 0.6% overstates the underlying softness in domestic activity. Retail sales in Japan contracted by -1.2% MoM, and consumer confidence has dropped to -16.7, suggesting weak forward demand.

Labour Market & Fiscal Health:
Switzerland maintains a low unemployment rate of 2.8%, a sign of robust economic management. Japan’s unemployment rate is also low at 2.5%, but the upward trend indicates some deterioration.

From a fiscal standpoint, Switzerland’s debt-to-GDP stands at 37.9%, with a budget surplus of 0.4%. Japan remains one of the most indebted major economies, with debt-to-GDP at 255% and a budget deficit of -5.5%. This adds structural pressure on the yen over the long term.

Trade Balance & Current Account:
Switzerland holds a trade surplus of CHF 5.3bn, with a current account surplus of CHF 9.8bn, translating to 7.6% of GDP. Japan, while also in surplus, reports JPY 4.1tn current account and CA/GDP of 4.7%. Both currencies are supported by external balances, but Switzerland’s is structurally stronger.

Conclusion:
Monetary divergence, fiscal stability, and stronger balance of payments support a bullish outlook for CHF/JPY. The yen remains fundamentally weaker on multiple fronts.

Sentiment Analysis

Retail Positioning:
Retail sentiment shows that approximately 79% of traders are short CHF/JPY, according to the latest positioning data. This imbalance reflects crowd bias against the franc — a clear contrarian bullish signal. When the majority is short and fundamentals support strength, institutional flows typically drive continuation of the prevailing trend.

Institutional Context:
Markets continue to view the franc as a relative safe haven amid geopolitical risks and weakening growth elsewhere. Demand for Swiss assets has risen in 2025, and funds have rotated out of JPY as the BoJ remains reluctant to normalise.

Conclusion:
The sentiment landscape supports a long CHF/JPY trade — retail traders are heavily biased in the opposite direction, enhancing risk-reward for bulls.

Technical Analysis

Ichimoku Cloud:

• Price is well above the current Kumo, confirming a strong bullish trend.
• Tenkan-sen (Conversion Line) is above Kijun-sen (Base Line) – a bullish momentum signal.
• Chikou Span is above both price and cloud – reinforces trend strength.
• Future Kumo is bullish, with Leading Span A trending higher above Span B.

RSI:

• RSI is sitting at 56.93, pointing up and above the RSI-based average.
• This reflects sustained bullish momentum with no signs of divergence or exhaustion.

MACD:

• MACD line is above the signal line, with a slightly positive histogram.
• Momentum is building gradually, not overextended, suggesting trend continuation rather than reversal.

Price Action:

• Higher lows since mid-March confirm the uptrend.
• Price is consolidating near 174.50, just below recent swing highs.
• A breakout above this level could target 176.50, with interim support at 172.80.

Volume:

• Recent bullish candles have come with above-average volume, supporting conviction behind the move.

Conclusion:
Technical structure strongly supports continued upside in CHF/JPY. Momentum, cloud alignment, and price action all favour trend continuation.

Final Verdict

The trade idea to buy CHF/JPY is supported across all analytical dimensions:

• Fundamentals favour CHF due to tighter policy, stronger external balance, and superior fiscal position.
• Sentiment is contrarian bullish, with the majority of retail traders positioned short.
• Technical analysis confirms a strong uptrend with clean structure, volume confirmation, and bullish Ichimoku signals.

For traders and investors seeking institutional-grade trade construction based on multi-factor confirmation, this pair offers a compelling long opportunity. To learn how to build trades like this with professional methodology, check out our Trading Courses.