The CHF/JPY pair presents a high-conviction long opportunity driven by a persistent policy divergence, strong fundamental support for the Swiss franc, and a technically robust uptrend. As the Bank of Japan continues to lag its global counterparts, the Swiss National Bank’s more balanced policy stance and superior macroeconomic footing make CHF/JPY a structurally bullish trade.

Fundamental Analysis

Swiss Franc Supported by Surpluses and Stability
Switzerland continues to benefit from exceptional macroeconomic fundamentals. The economy posted 0.5% GDP growth, with unemployment at just 2.8%, reflecting a tight labour market. Although inflation is slightly negative (-0.1% YoY), the SNB has already brought rates to 0.0%, and further cuts are limited. Crucially, Switzerland runs both a current account surplus of 19.38bn and a trade surplus of 1.98bn, and public finances remain strong, with government debt at just 37.9% of GDP and a budget surplus which supports CHF’s strength in the CHF/JPY context.

Japan’s Structural Weakness Remains
Japan shows little sign of policy normalisation despite core inflation at 3.5% YoY. The Bank of Japan continues to hold its policy rate at 0.5%, leaving real rates negative. GDP growth is stagnant at 0.0%, business confidence remains negative, and the economy is still dependent on accommodative policy. Although Japan enjoys a large trade surplus (37.3bn) and a current account surplus, the BoJ’s failure to respond to inflation with meaningful tightening keeps the yen fundamentally weak, cementing CHF/JPY as a favourable option.

Macro Positioning

• Policy divergence: SNB is neutral; BoJ remains ultra-dovish, enhancing the appeal of CHF/JPY.
• External balance: Both run surpluses, but CHF gains from capital inflows
• Fiscal discipline: Swiss fiscal metrics are far more favourable

Technical Analysis

The CHF/JPY daily chart reflects a strong bullish trend, with multiple signals aligned across all major indicators.

Ichimoku Cloud

• Price is well above the Kumo, confirming a strong uptrend that supports CHF/JPY position.
• Conversion Line (Tenkan-Sen) > Base Line (Kijun-Sen) = bullish crossover
• Chikou Span is well above the cloud and price, confirming trend strength
• Future Kumo is wide and rising, signalling continued upward momentum

RSI

• RSI is at 78.2, indicating strong bullish momentum and overbought conditions favourable to CHF/JPY.
• RSI-based moving average at 65.6 confirms that strength is sustained rather than spiked

MACD

• MACD line is at 1.271, comfortably above the signal line at 0.929
• The histogram is expanding positively, confirming upward momentum acceleration

Volume

• Volume is increasing in line with the breakout, confirming broad market participation supportive of CHF/JPY.

Price Action

• Strong bullish candlesticks with minimal upper wicks
• Clean series of higher highs and higher lows, with no signs of exhaustion

Sentiment Analysis

Speculative Positioning (COT Data)

• Speculators remain net short JPY, consistent with the market’s long-standing bearish yen bias enhancing CHF/JPY.
• CHF positioning is neutral to slightly long, with no evidence of overcrowding, facilitating CHF/JPY trades.

Retail Sentiment

• Retail traders are not excessively long CHF/JPY, reducing contrarian risk
• Momentum is primarily driven by institutional flow and macro alignment

Broader Risk Sentiment

• CHF continues to benefit as a safe-haven currency amid global macro uncertainty
• JPY’s historical safe-haven status is fading due to the BoJ’s ultra-loose stance, underscoring the CHF/JPY potential.

Conclusion

The CHF/JPY long trade is underpinned by:

• Strong macroeconomic performance and surpluses in Switzerland
• Policy divergence favouring the Swiss franc
• Technically powerful breakout with full Ichimoku and momentum confirmation
• Sentiment that aligns with trend continuation, not exhaustion

With strong alignment across fundamentals, sentiment, and technicals, CHF/JPY ranks as one of the most robust high-conviction trade ideas in the current FX landscape.

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