- The USD/CHF struggles to gain significant traction in mixed fundamental signals.
- The hard line signal of the SNB and the increase in geopolitical risks support the CHF of safe refuge.
- The reduction of the most aggressive rate cuts of the Fed supports the USD and cash prices.
The USD/ChF torque attracts some sellers near the 0.8200 brand and slides towards the lower end of a range of almost a week during the first part of the European session on Monday. Current cash prices are traded around the area of ​​0.8165-0.8160, with a 0.20% drop in the day, although the fall seems to be damping by the modest strength of the US dollar (USD).
In fact, the USD (DXY) index, which tracks the value of the dollar against a foreign exchange basket, rises to a maximum of almost two weeks amid the hard line position of the Federal Reserve (Fed). The US Central Bank maintained its projection of two rate cuts by the end of 2025, but reduced the forecast to only a cut of 25 basic points in each of 2026 and 2027, amid the concern that the tariffs of US President Donald Trump could increase the prices to the consumer. This, in turn, is considered a tail wind for the dollar and the USD/Chf.
The Swiss Franco (CHF), on the other hand, receives support from the Swiss National Bank (SNB) signal that it does not plan more interest rate cuts, disappointing investors who expected the rates to return to the negative territory this year. Meanwhile, the increase in geopolitical tensions in the Middle East and uncertainties related to trade moderate the appetite of investors by riskier assets. This is considered another factor that supports the CHF of safe refuge and exerts some downward pressure on the USD/CHF torque.
The aforementioned mixed fundamental background, however, justifies a certain caution before opening aggressive directional bets. The next thing on the agenda is the publication of the preliminary PMISs of the US, which could influence the feeling of global risk and move the CHF later during the American session, since the operators expect with interest to Iran’s response to the US air attacks on their nuclear facilities. Apart from this, USD price dynamics could contribute to short -term trading opportunities around the USD/CHF torque.
Franco Swiss faqs
The Swiss Franco (CHF) is the official currency of Switzerland. It is among the ten most negotiated coins worldwide, reaching volumes that far exceed the size of the Swiss economy. Its value is determined by the general feeling of the market, the country’s economic health or the measures taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franco was linked to the euro (EUR). The link was eliminated abruptly, which resulted in an increase of more than 20% in the value of the Franco, which caused a turbulence in the markets. Although the link is no longer in force, the fate of the Swiss Franco tends to be highly correlated with that of the euro due to the high dependence of the Swiss economy of neighboring Eurozone.
The Swiss Franco (CHF) is considered a safe shelter asset, or a currency that investors tend to buy in times in markets. This is due to the perception of Switzerland in the world: a stable economy, a strong export sector, great reserves of the Central Bank or a long -standing political position towards neutrality in global conflicts make the country’s currency a good option for investors fleeing risks. It is likely that turbulent times strengthen the value of the CHF compared to other currencies that are considered more risky to invest.
The Swiss National Bank (BNS) meets four times a year (once each quarter, less than other important central banks) to decide on monetary policy. The bank aspires to an annual inflation rate of less than 2%. When inflation exceeds the objective or it is expected that it will be overcome in the predictable future, the bank will try to control the growth of prices raising its type of reference. The highest interest rates are usually positive for the Swiss Franco (CHF), since they lead to greater returns, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the CHF.
Macroeconomic data published in Switzerland are fundamental to evaluate the state of the economy and can affect the assessment of the Swiss Franco (CHF). The Swiss economy is stable in general terms, but any sudden change in economic growth, inflation, current account or foreign exchange reserves have the potential to trigger movements in the CHF. In general, high economic growth, low unemployment and a high level of trust are good for Chf. On the contrary, if the economic data suggests to a weakening of the impulse, the CHF is likely to depreciate.
As a small and open economy, Switzerland depends largely on the health of the neighboring economies of the Eurozone. The European Union as a whole is the main economic partner of Switzerland and a key political ally, so the stability of macroeconomic and monetary policy in the Eurozone is essential for Switzerland and, therefore, for the Swiss Franco (CHF). With such dependence, some models suggest that the correlation between the fate of the euro (EUR) and the Swiss Franco is greater than 90%, or almost perfect.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
