USD/CHF traded near 0.7729 on Tuesday, close to a one-week high. The Swiss franc weakened as the US dollar strengthened. The US Dollar Index held near 97.40, up about 0.32%. Recent US data helped the move: – The NY Empire State Manufacturing Index came in at 7.1 in February, above the 6.0 forecast, but down from 7.7. – The ADP Employment Change four-week average rose to 10.3K from a revised 7.8K (previously 6.5K). Traders have scaled back expectations for a near-term Federal Reserve rate cut. This followed stronger Nonfarm Payrolls data and an Unemployment Rate that fell to 4.3% from 4.4%. The CME FedWatch Tool shows June as the most likely month for the first cut. Markets are focused on: – The Fed’s Meeting Minutes on Wednesday – Friday’s core PCE Price Index – The advance estimate of fourth-quarter US GDP These releases could shift rate expectations and move the dollar. Lower demand for safe-haven assets also pressured the franc after a second round of US–Iran nuclear talks in Geneva. In Switzerland, CPI rose 0.1% in January. The SNB targets 0–2% inflation, and markets expect rates to stay unchanged in March and remain steady through 2026. We first discussed this setup in February 2025, when USD/CHF traded near 0.7729. At the time, markets expected Fed rate cuts to begin by June 2025 because inflation was easing. That view was generally bearish for the US dollar versus the Swiss franc. Over the past year, the story changed. The Fed delivered only two of the four expected rate cuts in the second half of 2025, then paused. The US economy held up better than expected, and that strength has continued into this year. The US Dollar Index (DXY) shows the shift, now trading around 104.5—well above the 97.40 level from this time last year. January 2026 data is adding to the dollar’s support and weakening the case for more Fed easing. The latest Nonfarm Payrolls report showed a stronger-than-expected gain of 210,000 jobs. The most recent CPI report showed inflation rising to 3.2% year over year. As a result, markets have sharply reduced the odds of a March 2026 rate cut. The Swiss National Bank has also stayed on hold. Swiss inflation remains low, at 1.4% in the latest report. The diplomatic progress with Iran seen in early 2025 has mostly held, which has reduced safe-haven demand that can lift the franc. The gap in economic momentum and monetary policy between the US and Switzerland is becoming clearer. Given this setup, we think USD/CHF is more likely to move higher in the coming weeks. The dollar’s yield advantage is widening again, which makes it more attractive to hold than the franc. Traders may want to consider strategies that benefit from a stronger dollar versus the franc. Derivative trades can be built to match this view. One approach is to buy near-the-money USD/CHF call options, such as a 0.9000 strike expiring in April, to gain upside with defined risk. A lower-cost alternative is a bull call spread, which can help offset the cost of the calls.

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