The USD/CHF exchange rate has dropped to about 0.7950 after the U.S. and Switzerland reached a new tariff agreement. This deal cut tariffs from 39% to 15%, giving a boost to the Swiss Franc as it relieved the burden of high tariffs. Plus, there are growing expectations that the Swiss National Bank will keep its policy rate at 0% in December, adding more support for the Swiss Franc.

Monetary Policy Influences

The chance of a 25 basis point rate cut by the Federal Reserve in December is currently at 43%, according to the CME FedWatch Tool. Federal Reserve officials have mixed opinions about rate cuts; some focus more on risks in the labor market than on inflation. The strength of the Swiss Franc largely depends on the Swiss economy and the Swiss National Bank’s actions. The Swiss Franc is generally considered a safe-haven currency, thanks to Switzerland’s stable economy and neutrality in global conflicts. Economic indicators, especially those related to inflation and growth, heavily influence its value. Additionally, the economic policies of the Eurozone affect the Swiss Franc because Switzerland is closely tied to this region. This means the performances of the Euro and the Swiss Franc are strongly linked. With the new U.S.-Switzerland tariff deal, the Swiss Franc is gaining solid support. Lowering the tariff from 39% to 15% is a significant boost for Switzerland’s export-focused economy, which exported over $67 billion worth of goods to the U.S. in 2024. This development should provide strong momentum for the Franc in the weeks ahead. The Swiss National Bank’s consistent policies give us more confidence in the Franc. With October 2025’s inflation rate at 1.9%, the SNB’s choice to keep the policy rate at 0% is seen as a strong move, making the Franc more appealing. We expect this policy stability to help maintain the currency’s value leading up to the December SNB meeting.

Market Strategies

On the other hand, the U.S. dollar is experiencing uncertainty due to a divided Federal Reserve. The latest U.S. Non-Farm Payrolls report showed a disappointing increase of just 95,000 jobs, raising concerns about a slowing labor market. The differing views among Fed officials on rate cuts for December introduce volatility that we can potentially take advantage of. For those trading derivatives, this situation suggests that selling rallies in USD/CHF may be a wise strategy. The differing outlook from the Fed is likely to increase implied volatility, making options trading appealing. We should think about buying put options on USD/CHF as we expect it to move lower towards the 0.7800 level. It’s also essential to remember the Swiss National Bank’s past actions, like when it suddenly removed the euro peg in 2015, which caused chaos in the markets. While the current situation seems stable, this history serves as a caution to manage risk carefully. The possibility of sudden policy changes means that holding long-volatility positions could be advantageous. Besides this pair, the strength of the Swiss Franc may create chances against other currencies. With recent Eurozone manufacturing PMI figures for October 2025 staying below 50, indicating contraction, we see potential in shorting EUR/CHF. This move would capitalize on a robust Swiss economy alongside a struggling Eurozone. Create your live VT Markets account and start trading now.

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