USD/CHF is steady near 0.7950 as traders wait for the US CPI data for November. This data will likely influence the Federal Reserve’s upcoming policy decisions. The US Dollar Index is unchanged at about 98.45, having bounced back after the US Nonfarm Payrolls data was released. The CPI is expected to show an annual rise of 3.1%, up from October’s 3%.

Market Expectations

Traders will watch closely for the Fed’s reaction, as inflation continues to stay above the target of 2%. US President Trump mentioned that the next Fed chair might support lower interest rates, a view that could weaken the US Dollar. At the same time, the Swiss Franc is stable due to uncertainty surrounding the Swiss National Bank’s (SNB) policy. The SNB is expected to avoid negative rates since this could harm savers and pensions. The Consumer Price Index (CPI) measures inflation by comparing current prices to those of a year ago. The Fed aims for 2% annual inflation, but supply chain issues have pushed it higher. The next CPI update will be on December 18, 2025, reflecting current economic conditions. With USD/CHF near multi-year lows around 0.7950, there is noticeable tension ahead of the US inflation report. If the CPI rises more than expected, hitting 3.2% or higher, it could lead to a quick rally in the US Dollar, challenging the idea of immediate Fed rate cuts. Traders might consider short-term call options to capitalize on this possible temporary increase.

Future Outlook

Looking ahead, the most significant event will be the appointment of a new Federal Reserve chair. A preference for a leader who supports much lower interest rates could put downward pressure on the US Dollar. This means that any strength in the dollar after the inflation report might be a good selling opportunity, and longer-dated USD/CHF put options could help position for a decline as we enter the new year. We should consider the context of the past few years, as the current weakness of the dollar stands out. For example, the Swiss National Bank was among the first major central banks to cut rates back in March 2024, yet the franc remains strong against the dollar. The USD/CHF at 0.7950 despite a more dovish SNB highlights market worries about the US outlook. Implied volatility in the options market indicates this uncertainty, with one-month volatility for USD/CHF rising to about 9%, compared to an average of around 6% during calmer times earlier in the year. This higher volatility makes options betting on significant price swings, regardless of the direction, more expensive but potentially lucrative. The market is preparing for a meaningful breakout from the current tight range. Given the mixed short-term and medium-term signals, a smart strategy would be to brace for a potential spike following the CPI data. If a rally approaches the 0.8050-0.8100 resistance level, it could be wise to open new bearish positions. This would provide a better entry point for targeting lower levels, driven by the expected dovish shift from the Federal Reserve. Create your live VT Markets account and start trading now.

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