Swiss President Keller expressed disappointment after the US announced a 39% tariff on Swiss imports. This new tariff is higher than what was previously agreed upon and will impact key Swiss industries, especially machinery and watches, while pharmaceuticals remain unaffected. Switzerland is in touch with the US to find a solution. The country has no industrial tariffs and has already promised to invest in the US, making further concessions difficult.

Currency Fluctuations

The tariff news comes at a time when the USDCHF currency pair is fluctuating, impacted by a weaker-than-expected US jobs report. Earlier, the pair peaked at 0.81732 but then dropped below the 100-hour moving average of 0.80856 after the job data was released. A swing area between 0.8054 and 0.80628 is now in focus, with the 200-hour moving average at 0.80159. There’s a conflict between short-term trends and a significant new economic story. The poor US jobs report is currently weakening the US dollar, but the surprising 39% tariff on Swiss goods poses a serious challenge for the Swiss economy. This underlying weakness of the Swiss franc is likely to have a bigger impact than the temporary dip of the dollar in the medium term. The effect of these tariffs on specific Swiss industries will be significant and should not be overlooked. Reviewing trade data from 2024, the US was the largest market for Swiss watches, with exports exceeding CHF 3.6 billion. A 39% tariff would make much of this trade unprofitable, directly affecting the Swiss economy.

Swiss National Bank Actions

The Swiss National Bank (SNB) is known for taking action against economic threats that could strengthen the franc. A past example is when it unpegged the franc from the euro in 2015. The market should expect that the SNB will aim to weaken the franc in response to the recent tariff news. For derivative traders, this situation suggests buying call options on USDCHF in the coming weeks. This strategy allows traders to profit from an expected increase in the currency pair due to a weaker franc, while also limiting potential losses if the US dollar remains weak longer than anticipated. The recent dip below the 100-hour moving average offers a better entry point for these trades. Key technical levels to watch include the swing area between 0.8054 and 0.8062, as well as the 200-hour moving average at 0.80159. Signs of price stabilization at these support levels would be seen as a strong signal to initiate long-position derivative trades. The tariff news should provide support for the pair, making a significant drop below these levels unlikely. This mix of news is likely to increase implied volatility in the USDCHF pair. The unexpected tariff adds uncertainty, making options more expensive but also indicating a higher chance of sharp price movements. Traders should consider this increased volatility in their strategies for the coming weeks. Create your live VT Markets account and start trading now.

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