USD/CHF Breaks 0.8650 as Yield Spreads Widen; Swiss Disinflation Accelerates

USD/CHF surged 0.8% to 0.8680, breaking above key resistance at 0.8650 as widening US-Swiss yield spreads and accelerating Swiss disinflation drove the franc lower. The US 2-year yield climbed to 4.25% while Swiss 2-year yields remained near 0.50%, creating a 375 basis point differential favoring the dollar. Swiss CPI data showed inflation dropping to 0.8% year-over-year, well below the SNB's 2% target, raising expectations for further Swiss National Bank easing. Technical analysis reveals the pair has completed a bullish breakout from a month-long consolidation pattern, with momentum indicators confirming upward bias. The 10-year yield spread has also widened to 340 basis points, reinforcing the fundamental backdrop for USD strength. Next resistance targets 0.8720 (October high), while support has formed at 0.8650 (former resistance). Traders should monitor upcoming Swiss retail sales data and any SNB commentary for further directional cues.