The Swiss Franc (CHF) is gaining slowly against the US Dollar (USD) as new concerns about US fiscal policies and trade arise, increasing interest in safe-haven currencies. The USD/CHF pair is under pressure as traders consider the effects of the recent bill and the tariff deadline on July 9, which may lead to more market fluctuations. A ceremony at the White House will celebrate the bill that raises the US debt ceiling by $5 trillion. This bill helps avoid a short-term funding crisis but also raises federal borrowing. The Congressional Budget Office predicts that this bill will increase the US budget deficit by $3.3 trillion over the next ten years, exceeding past estimates by over $1 trillion. These fiscal issues are affecting confidence in the US Dollar.

Increasing Government Debt

Rising government debt raises worries about long-term financial stability and inflation risks, which can weaken confidence in the Dollar. Along with concerns over possible tariffs, this may boost the Swiss Franc. Currently, USD/CHF trades below 0.8000 due to uncertainty and lower trading volumes from the US Independence Day holiday. Potential tariff notices from the Trump administration add to market tensions as the deadline nears. Looking at the USD/CHF 4-hour chart, prices are stabilizing above 0.7940, with resistance at 0.7950 and support at 0.7927. If the US Dollar remains weak, a drop below 0.7900 may lead USD/CHF to test lower levels around 0.7872. Conversely, if it rises above 0.8000, it could increase towards 0.8015. This situation highlights mounting pressure on the US Dollar due to two main factors: rising federal borrowing and the increasing likelihood of further trade restrictions. The new legislation adds trillions to the existing US debt, avoiding immediate funding issues but failing to reassure long-term market players about financial stability. As debt and deficits can influence inflation expectations, the Dollar may struggle to find its footing in the short run. Now that the US budget deficit is expected to be larger than previously thought, this new debt issuance might impact yields and investor trust. When combined with tariff risks, this often leads to a move towards safer investments, explaining the ongoing interest in defensive currencies.

Franc Benefits From Broader Tension

In this context, the Franc is quietly gaining from the overall tension in the market. Currently, the focus is on short-term trading, especially amidst reduced liquidity during the recent US holiday. This thin market environment does not benefit the Dollar, especially with institutional players lacking strong confidence due to uncertainty surrounding future policies. On the charts, prices are moving sideways, hovering just above 0.7940, indicating uncertainty rather than strong direction. Resistance at 0.7950 remains intact, while the key psychological level is around 0.8000, which could serve as a short-term pivot point. If this level breaks upward, the next key price to watch is 0.8015. On the other hand, if the price drops below 0.7900, it may trigger stops that could pull the pair down toward the 0.7872 area. As tariff announcements are expected soon, each headline carries significant importance, leading to increased short-term volatility. It’s crucial to pay attention to upcoming speeches from policymakers, as their tones could quickly shift market dynamics. Traders who keep their positions flexible and small will be in a better position than those who make large commitments too soon, allowing for a more resilient approach in such uncertain times. It is important to adjust position sizes according to the level of uncertainty—entering positions near key levels and adding only when there is confirmation can help manage exposure. With liquidity varying and political risks rising, exercising patience can be a strategic advantage rather than a missed chance. In these situations, being reactive may outpace trying to predict outcomes, so staying adaptable is crucial. Create your live VT Markets account and start trading now.

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