Swiss Franc Policy Focus
The Swiss Franc remained sensitive to possible action by the Swiss National Bank to limit fast gains in the currency. The SNB left its policy rate unchanged at 0% on Thursday and stated it was ready to intervene in foreign exchange markets to curb rapid Swiss Franc appreciation. We remember looking at the market in 2025 when USD/CHF was struggling below 0.7900. At that time, the discussion was about the Federal Reserve holding rates around 3.75% while the Swiss National Bank was at zero. That environment suggested the SNB would have to actively fight to weaken the franc. Fast forward to today, March 20, 2026, and the picture is dramatically different with the pair now trading near 0.9150. The Fed has since held rates firm in the 4.75%-5.00% range, while the SNB has brought its own policy rate up to 1.50%. This significant policy divergence is the main reason for the dollar’s sustained strength against the franc. The dollar’s position is reinforced by a resilient US economy, with the last jobs report showing a solid gain of over 250,000 positions. US inflation, while lower than its peak, remains stubbornly above target at 2.8%, giving the Fed very little room to consider rate cuts. This backdrop makes strategies that benefit from a stable or rising dollar attractive.Shifting SNB Priorities
Meanwhile, the SNB’s old promise to intervene against franc appreciation, a major theme in 2025, is no longer a factor. With Switzerland’s own inflation recently surprising to the upside at 1.9%, the central bank is now more focused on price stability than on actively weakening its currency. This removes a major headwind that previously capped USD/CHF gains. Given this environment, traders should anticipate that volatility may increase as markets price in continued policy differences. A sensible approach in the coming weeks would be to use options to position for further, gradual USD/CHF strength, perhaps by buying call spreads. This allows participation in potential upside while defining the risk if the economic data were to suddenly shift. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
