The USD/CHF currency pair has dropped to a three-week low below 0.7985 after the Swiss National Bank (SNB) announced its decision. The SNB kept the interest rate at 0% and expects moderate economic growth by 2026. After the SNB meeting, the Swiss Franc strengthened, leading to a nearly 1% decline in USD/CHF over the past three days. Investors are now looking for more details from Governor Schlegel’s press release about future monetary policy.

Swiss Inflation and Economic Outlook

The SNB highlighted that inflation is lower than expected but maintains an unchanged medium-term inflation outlook. Despite a contraction in the Swiss economy in Q3, an improvement is anticipated due to lower US tariffs and stronger global growth. On the other hand, the US Dollar is under pressure following a dovish approach from the Federal Reserve, which cut rates by 25 basis points as anticipated. The Fed signaled only one more rate cut in 2026. Markets expect further easing next year, even as Chairman Powell minimized concerns about inflation. The SNB meets four times a year to decide on interest rates, impacting the Swiss Franc. Hawkish decisions typically strengthen the CHF, while dovish decisions weaken it. The Governing Board Chairman’s press conference often leads to market volatility, especially during the unscripted Q&A session. With the Swiss National Bank holding rates steady at 0% while the US Federal Reserve has just cut rates, there is a clear divergence in policies, which favors a lower USD/CHF exchange rate. The failure to maintain the 0.8000 level is a significant technical signal of further weakness, suggesting that the Swiss Franc will continue to strengthen against the US Dollar in the coming weeks.

Swiss Economic Stability

The SNB’s confidence seems justified, especially since recent data from the Swiss Federal Statistical Office shows that the unemployment rate for November 2025 remains low at 2.1%. This economic stability, combined with a manufacturing PMI that unexpectedly rose to 52.3, eases any immediate pressure on the SNB to change its policy, providing a solid foundation for the franc. In contrast, the US Dollar’s weakness is supported by new economic data. The latest US Core PCE Price Index, which the Fed views as its preferred inflation measure, stood at 2.3% year-over-year for October 2025. This supports Chairman Powell’s recent dovish remarks. The market is now factoring in a higher chance of further rate cuts in 2026 than what the Fed has indicated. Given this outlook, traders should consider buying put options on USD/CHF with expiration dates in late January or February 2026. This strategy bets on continued declines below the current 0.7985 level while limiting risk to the premium paid. It’s a direct response to the diverging monetary policies currently at play. We witnessed a similar situation in 2023 when the SNB’s strong stance contrasted with a Fed that paused, pushing USD/CHF down significantly through mid-year. Traders should be prepared for volatility around the upcoming SNB press conference, as any unexpected comments from Governor Schlegel could cause sharp price movements. Create your live VT Markets account and start trading now.

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