The USD/CHF pair has decreased for four straight days, hitting a two-week low around 0.7900 due to ongoing weakness in the US Dollar. The US Dollar Index is under pressure from expected interest rate cuts by the Federal Reserve and a prolonged US government shutdown, with markets fully pricing in two additional cuts in October and December. Rising tensions between the US and China, along with geopolitical risks, are strengthening the Swiss Franc (CHF) as a safe haven. President Trump has threatened to raise tariffs on Chinese goods, while China has limited rare earth exports. The two countries are also imposing reciprocal port fees, all of which are affecting equity markets and pushing down the USD/CHF from its recent high of 0.8075.

US Dollar’s Position Against Major Currencies

The table shows the US Dollar losing value against major currencies. It has fallen by 0.79% against the Euro and 1.37% against the Swiss Franc, while gaining 0.33% against the Japanese Yen. The heat map indicates a strong performance for the Swiss Franc this week, reflecting market reactions to geopolitical and economic uncertainties. Looking back, it seems like ages ago when USD/CHF was near 0.7900. Now, this pair has climbed higher, recently exceeding 0.9150 due to changing market conditions. The previous decline in the US Dollar has completely reversed over the last year. The main reason for this shift is the differing policies of central banks, a trend we’ve observed since early 2024. The Swiss National Bank (SNB) was one of the first major central banks to start easing, reducing its policy rate to 1.00% to tackle low inflation, which Swiss data from September 2025 shows is steady at 1.5% year-over-year. This has made the Swiss Franc less attractive for those seeking yield. In sharp contrast, the US Federal Reserve is sticking to a tight policy, keeping the Fed Funds Rate between 5.25% and 5.50%. Recent Consumer Price Index (CPI) data for September 2025 revealed that inflation remains stubbornly high at 3.4%, well above the Fed’s 2% target, supporting the narrative of “higher for longer.” This interest rate difference is driving the US Dollar upward against the Franc.

Strategic Trade Positioning

For derivative traders, this strong policy-driven trend suggests a strategy for further USD/CHF strength. Purchasing call options with strike prices at 0.9250 and 0.9300 for the upcoming months seems a solid way to benefit from this anticipated movement. This approach offers defined risk while allowing for significant upside if the interest rate gap continues to impact currency flows. However, it is prudent to consider protective strategies in case of sudden market shifts. Buying out-of-the-money put options, perhaps with a strike around 0.9000, can be an affordable hedge against sudden reversals. This provides a safety net if geopolitical tensions escalate, which typically leads to increased demand for the Swiss Franc. Monitoring implied volatility around upcoming central bank meetings for both the Fed and the SNB is also wise. Trading volatility through straddles could prove lucrative, as any unexpected changes in policy statements are likely to cause significant price movements in either direction. These events are critical points for our current bullish outlook on the pair. Create your live VT Markets account and start trading now.

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