USD/CHF dropped below 0.7750 and traded near 0.7730 in early European trading on Wednesday. The move came as the US Dollar weakened against the Swiss Franc after Donald Trump’s annual State of the Union address to Congress. Swiss Q4 GDP and the US January Producer Price Index (PPI) are due on Friday.
In his speech, Trump described a “turnaround for the ages.” He focused on lower inflation, and on efforts to reduce illegal immigration and fentanyl at the border. He also said tariffs were “one of the main reasons” for the US economic shift, and called a US Supreme Court ruling on tariffs “unfortunate”.
Tariff Policy Uncertainty
Trump also talked about new 15% global tariffs under Section 122 of the Trade Act. He said they were “a little more complicated” and suggested they could lead to results “even stronger than before”. Continued uncertainty around US tariff policy has pressured the US Dollar.
Markets are also watching US–Iran tensions ahead of nuclear talks in Geneva on Thursday. The US embassy in Lebanon evacuated “dozens of its staff members” on Monday. Any change in the dispute could affect demand for the Swiss Franc.
This is similar to late February 2025, when the dollar fell sharply after President Trump’s speech. New ideas for global tariffs created major uncertainty and weighed on the dollar. As traders looked for the relative safety of the franc, USD/CHF fell below 0.7750.
Tariffs then became one of the main themes of 2025. They helped drive ongoing dollar weakness and higher market volatility. Tensions with Iran also stayed in the background, keeping demand steady for safe-haven assets like the Swiss franc. This trend has continued, with the pair now trading near a multi-year low of 0.7520.
Central Bank Expectations
Looking ahead, the key difference is what markets expect from central banks. January 2026 inflation data showed US core CPI holding at 2.9%, which makes it harder for the Federal Reserve to consider rate cuts. In Switzerland, inflation is still well below target at 1.3%, giving the Swiss National Bank (SNB) less reason to act aggressively.
It is also important to watch how much strength in the franc the SNB will accept. The SNB has stepped in before to weaken its currency. SNB sight deposits, often used as a proxy for intervention, rose slightly in the latest reporting week. This suggests the SNB is watching current levels closely. If the franc strengthens sharply from here, the SNB could respond more forcefully.
Because of this, traders may want strategies that can benefit from a slow move lower in USD/CHF, while also protecting against a sudden rebound. Buying put options gives downside exposure, but a bear put spread may be a better fit. This approach limits the maximum profit, but lowers the upfront cost and defines risk if the SNB steps into the market.
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