The US dollar is still the top currency in the world, as stated by Martin Schlegel, the Chairman of the Swiss National Bank. He believes that the Federal Reserve plays a crucial role in the global financial system, and there’s currently no alternative to the US dollar. Understanding how tariffs affect Switzerland is not easy. The Swiss National Bank is very cautious about lowering interest rates and will only consider it if absolutely necessary.

Maintaining Central Bank Independence

Schlegel highlights the need to keep central banks independent. While some worry that the US dollar might lose its prominence, it remains vital to the global financial system. Any shift in its dominance would take decades to occur. For now, no changes to Swiss monetary policy are expected. The bank would need strong reasons to think about negative interest rates again. The US dollar’s reign isn’t ending soon. Recent data from SWIFT for August 2025 shows the dollar still accounts for over 47% of global payments. The Federal Reserve continues to be the main force in the international financial system, and there’s no real competitor right now. This solidifies the dollar as the primary funding currency, making it less appealing to bet against. It might be wise to implement strategies that take advantage of this stability, such as selling far out-of-the-money puts on the dollar index (DXY). Currently, the implied volatility for major dollar pairs is lowering compared to the spikes we saw in 2023, indicating the market expects the dollar’s strength to persist.

Trading Strategies and Currency Analysis

In Switzerland, monetary policy appears to be on hold. With Swiss inflation at a manageable 1.6% for August 2025, there is no urgent need for the central bank to act. The high threshold for returning to negative rates, as seen from 2015 to 2022, suggests that the Swiss franc will not be intentionally weakened. For derivative traders, this indicates stability for the Swiss franc, especially against the euro. We might consider selling short-dated strangles on EUR/CHF, betting the pair will stay within a tight range. Given that the Fed has a higher policy rate, buying USD/CHF call options could also be a good strategy to benefit from widening interest rate differences. We’ve heard similar concerns before, with discussions about the dollar’s downfall peaking in early 2024. Yet, its share of central bank reserves has remained steady at 58% through the second quarter of this year. Any significant shift away from the dollar will likely take decades, not weeks. Thus, maintaining a core long-dollar position seems to be the smart choice in the upcoming weeks. Create your live VT Markets account and start trading now.

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