The Swiss Franc is losing value against the US Dollar, with the USD/CHF rate around 0.7960, up nearly 0.43% as the US Dollar rebounds from a low of 0.7873. The US Dollar is gaining strength due to easing trade tensions between the US and China. The US Dollar Index is near 98.90, marking its third consecutive day of increases. US President Trump expressed hope for a trade deal at the upcoming APEC Summit in South Korea, but later hinted that the meeting might not take place. The market is paying close attention to high-level trade talks in Malaysia, where US Treasury Secretary Scott Bessent is set to meet with Chinese Vice Premier He Lifeng.

Temporary Strength of US Dollar

The current strength of the US Dollar might not last. Economic uncertainties linger due to Trump’s trade comments and the ongoing US government shutdown. Analysts expect a 25-basis-point rate cut at the next Federal Reserve meeting, and Friday’s CPI data could have an impact. In Switzerland, the trade surplus decreased to CHF 10.2 billion in the third quarter, down from CHF 12.6 billion in the previous quarter. The US Dollar is widely used, with over $6.6 trillion traded daily. It became the world’s reserve currency after World War II, replacing the British Pound. The Federal Reserve’s monetary policy, which includes interest rate changes, affects the USD. Quantitative easing (QE) usually weakens the Dollar, while quantitative tightening (QT) can strengthen it. As of October 21, 2025, the US Dollar has gained strength against the Swiss Franc, with the USD/CHF pair around 0.9150. This is a stark contrast to late 2019 when the pair struggled below 0.8000 due to different global issues. While the market dynamics have shifted, the underlying uncertainties are still evident.

Federal Reserve and Swiss National Bank Policies

The Federal Reserve is currently keeping interest rates steady after an aggressive hike in 2022-2023 that reduced inflation from over 9% to about 3.1% in late 2024. Traders are now waiting to see when the Fed will ease policies. Caution is advised for those who might be too optimistic about the Dollar, as the futures market anticipates potential rate cuts in the first half of 2026. Meanwhile, the Swiss National Bank (SNB) is also holding rates steady, but it faces different challenges related to the strength of the Franc and its effects on exports. With Swiss inflation decreasing faster than in the US, the SNB might have room to cut rates sooner. Any indication of a softer stance from the SNB could weaken the Franc and push the USD/CHF pair higher. Reflecting on 2019, trade tensions drove much market volatility. Although those tensions have changed, new uncertainties exist today. Ongoing issues in global supply chains and geopolitical risks mean that the Swiss Franc’s appeal as a safe haven could quickly resurface. A sudden market shift to safety could strengthen the Franc and push the USD/CHF pair lower. For derivative traders, the current situation suggests a potential upward trend for USD/CHF, largely because the SNB may cut rates before the Fed. We see value in buying medium-term call options to profit from a rise in the pair, targeting a move toward 0.9400 by mid-2026. This strategy helps limit initial capital risk while allowing for growth. In the short term, the risk of sudden market shocks is high, which could cause a sharp decline in USD/CHF. To manage this risk, we are considering short-term put options with a strike price around 0.9000 as a hedge against abrupt market sentiment shifts. This creates a balanced position that accounts for both near-term volatility and the expected long-term policy differences. Create your live VT Markets account and start trading now.

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