The USD/CHF pair has fallen below 0.7900 as traders await the Swiss ZEW Expectations survey. This marks the second day of losses for the pair, driven by expectations of easing policies from the Federal Reserve. Traders are also focusing on upcoming US GDP data, expected to be 3.2% for Q3, down from 3.8% in Q2. Additionally, the US ADP Employment Change and Q3 Core PCE data are on the radar.

Policy Debate

Stephen Miran from the Federal Reserve warns that not easing policies might lead to a recession, while Fed officials have mixed opinions on future moves. Beth Hammack agrees that current monetary policy is appropriate for pausing to assess the effects of recent rate cuts. The Swiss Franc (CHF) is influenced by market sentiment, the economy’s health, and the Swiss National Bank’s policies. As a safe-haven currency, the CHF reflects Switzerland’s stability and strength and is sensitive to economic conditions in the Eurozone. Actions by the Swiss National Bank affect the value of the CHF, as their monetary policy can influence interest rates and currency yields. Key economic data releases are critical for predicting changes in CHF value, with the performance of the Swiss economy being closely monitored.

Fed Easing and CHF Strength

Switzerland’s economy is closely tied to that of the Eurozone, which maintains a strong connection between the CHF and Euro (EUR). The drop in USD/CHF below 0.7900 signals that the market anticipates more aggressive easing from the US Federal Reserve. This trend has continued since the third quarter of 2025, especially after the recent US Core PCE inflation data showed a two-year low of 2.6%. This data gives the Fed the green light to keep cutting rates to prevent a recession. For derivative traders, this outlook supports strategies that benefit from further weakening of the USD against the Swiss Franc. Buying put options on USD/CHF for the next few weeks is a direct way to position for this, especially with implied volatility steady at around 8.5%. The upcoming Swiss ZEW survey is the next significant factor; a strong result could accelerate the pair’s decline. Looking back, the Fed’s shift this year contrasts sharply with the aggressive rate hikes seen in 2022 and 2023. However, the Swiss National Bank faces a different situation, as domestic inflation remained steady at 1.4% last month, well within its target. This difference between a dovish Fed and a neutral SNB is a key reason we remain bearish on the pair. We must also consider the safe-haven appeal of the Swiss Franc, which is gaining strength as concerns about the Eurozone economy resurface. Recent data indicating a slowdown in German manufacturing has led to a flight to safety, boosting the Franc. The close relationship between the CHF and Euro means that weakness in the Eurozone often results in relative strength for the CHF. As we approach the final trading week of 2025 and early January 2026, we expect lower holiday trading volumes to exaggerate market movements. Targeting put options with strike prices around 0.7800 and 0.7750, expiring in late January, seems wise. This allows time for the market to respond to the upcoming US jobs report for December, which is widely anticipated to show further cooling in the labor market. Create your live VT Markets account and start trading now.

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