USD/CHF is currently trading lower at around 0.7930, down 0.40% today. This drop occurs as investors await the US GDP report for the third quarter, highlighting uncertainty about Federal Reserve monetary policy. Federal Reserve President Beth Hammack notes that the current policy is suitable for a pause to evaluate the effects of previous rate cuts. According to the CME FedWatch tool, there’s a 79% chance that rates will stay the same in January, with the chance of a rate cut decreasing.

Focus on Switzerland

In Switzerland, attention is on the December ZEW Economic Expectations survey. The Swiss National Bank has kept the policy rate steady at 0%, believing that inflation pressures are manageable and support the economy. The heat map displays how the Swiss Franc has changed against major currencies. It is notably strongest against the US Dollar, while percentage changes against other currencies are also shown in the table. Ghiles Guezout, a market analyst, wrote this article focusing on market trends. It’s important to conduct personal research before making investment decisions, as this information serves only for informational purposes and should not be seen as a recommendation. With the Federal Reserve cutting rates by 75 basis points already, the US Dollar appears to be on shaky ground. The upcoming US Gross Domestic Product report is crucial; if it falls below the expected 2.1%, it could further weaken the dollar. Derivative traders may want to consider positioning for a possible drop in USD/CHF, as a weak GDP report might increase expectations for more Fed easing in 2026.

Market Strategies

Our perspective is reinforced by the latest inflation data, showing US CPI at 3.1% last month, significantly higher than the Fed’s target. In comparison, Switzerland’s inflation rate is much lower at 1.4%, meaning the Swiss National Bank has no reason to change its stable 0% policy rate. This significant policy difference supports the franc against the dollar. Given this situation, it may be wise to buy put options on the USD/CHF pair, which would profit from a continued decline. Using options helps us manage our risk to the premium paid, making it a careful choice considering the lighter holiday trading. We could look at expiration dates in late January or February 2026 to capture any reactions to the Fed’s next meeting. We recall market patterns from late 2023 when initial signs of a Fed policy shift led to a notable drop in the dollar. During that time, USD/CHF fell from over 0.91 to under 0.84 in just a few months. History indicates that once a Fed easing cycle begins, the dollar often trends downward. In the short term, we’ll closely monitor tomorrow’s Swiss ZEW Economic Expectations survey. A strong outcome would enhance the franc’s desirability as a stable currency, supported by a cautious central bank. The Swiss National Bank has confirmed its comfort with the current policy, providing a solid foundation for the franc. Create your live VT Markets account and start trading now.

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