The USD/CHF pair has risen, reaching close to 0.7950, amid ongoing worries about the Swiss economy. SECO has maintained Switzerland’s GDP growth forecast for 2025 at a low 1.3%, citing a general slowdown expected during the second half of the year. Furthermore, SECO has lowered its 2026 GDP projection from 1.2% to 0.9%. The Swiss Trade Balance data, set to be released on Tuesday, may provide additional insights into Switzerland’s economic condition. Even with the USD/CHF pair’s gains, the US Dollar is under pressure due to a government shutdown that is currently in its 19th day, with no end in sight. Senators have attempted and failed ten times to resolve the budget impasse. Additionally, the US Federal Reserve is expected to make more interest rate cuts, with markets indicating nearly a 100% chance of a reduction in October and a 96% chance for December.

Easing Trade Tensions

Improving trade relations between the US and China could help stabilize the USD. President Trump has shown interest in China buying soybeans at prior levels, suggesting a positive outlook for future trade deals. The Swiss Franc is affected by Switzerland’s economic stability, high living standards, and its role as a global tax haven. The USD/CHF pair is currently around 0.7950, caught between two opposing forces. The Swiss Franc is losing strength due to local economic worries, while the US Dollar struggles with its own issues stemming from the ongoing government shutdown. This situation creates a tricky environment for traders, with the Swiss Trade Balance data on Tuesday being an important indicator to monitor. The Swiss Franc’s ongoing weakness is supported by SECO’s bleak outlook, which forecasts below-average GDP growth of only 1.3% for 2025 and an even lower 0.9% for 2026. This could make purchasing call options on USD/CHF an appealing strategy, as profits would rise if the Franc continues to weaken. September 2025 inflation data, showing only a 1.1% year-over-year rise, reinforces the belief that the Swiss National Bank won’t rush to strengthen its currency. However, potential gains for USD/CHF face significant challenges from issues in the United States. The government shutdown, now at 19 days, is generating economic uncertainty and is approaching the length of major historical shutdowns, such as the 35-day period from 2018-2019. Additionally, the CME FedWatch tool indicates a nearly 100% chance of a Fed rate cut this month, further weakening the dollar.

Traders Strategies

Given these conflicting factors, traders might benefit by employing strategies that prepare for potential volatility, rather than expecting a clear directional movement. Buying put options on USD/CHF could serve as a helpful hedge against a possible resolution to the US shutdown or if the anticipated Fed rate cuts begin to impact the dollar more significantly. This approach provides protection if the pair does not rise and instead reverses. Looking at the bigger picture, it’s important to note that the current USD/CHF level of 0.7950 is historically low. Between 2015 and 2023, the pair often traded well above 0.9000. This context suggests that, despite immediate challenges for the US dollar, the long-term potential for the pair to climb remains strong if Swiss economic issues keep prevailing. Create your live VT Markets account and start trading now.

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