The USD/CHF pair is trending down for the third consecutive day, but there isn’t a lot of strong selling pressure due to mixed economic signals. During Thursday’s Asian session, prices stayed above the weekly low, hovering slightly over the mid-0.8000s, and experienced a 0.1% decrease for the day. The US Dollar is weak, near a one-and-a-half-week low, as many expect the Federal Reserve to cut rates in September after poor US economic data. Low US Treasury yields are putting pressure on the USD/CHF pair, but factors are preventing a strong rise in the Swiss Franc, which limits further price drops.

Switzerland Tariff Impact

Switzerland faces a hefty 39% tariff on US exports, and US officials have rejected a proposed adjustment to this tariff. This, along with a positive risk sentiment, reduces the Swiss Franc’s appeal as a safe-haven asset, providing some support to the USD/CHF pair. Future price movements may hinge on weekly US jobless claims and upcoming speeches from FOMC members. The Swiss Franc’s value is shaped by market sentiment, the health of the Swiss economy, and overall European economic conditions. It is known as a safe-haven currency due to Switzerland’s stable economy and neutrality but is also influenced by developments in the Eurozone. With the current downward trend in USD/CHF, the market is pricing in a weaker US Dollar in the weeks ahead. The CME FedWatch Tool indicates a greater than 70% chance of a Federal Reserve rate cut in September 2025, adding pressure to the dollar. This suggests that any upward movements in the currency pair could be short-lived, creating chances for bearish trades. Recent US economic data from July 2025 supports this view, particularly as the ISM Manufacturing PMI has been below 50 for three consecutive months. We’re closely monitoring upcoming weekly jobless claims data; another high number would reinforce expectations of a cooling labor market. These elements support strategies that benefit from a declining USD/CHF, such as purchasing put options.

Swiss Franc Headwind

However, we must take into account the significant challenge for the Swiss Franc posed by the 39% US tariff. This trade dispute adds uncertainty for the Swiss economy, which could limit the strength of the franc and prevent a significant drop in the pair below the 0.8000 mark. The tension between a weak dollar and a possibly weakened franc suggests that volatility may rise. Historically, we can look back to late 2023, when expectations of Fed policy easing significantly pulled the USD/CHF pair lower. Given the current circumstances, traders may want to consider shorting the pair if it strengthens but should do so with caution. Using options, like a bear put spread, may be a prudent way to express this view while minimizing risk should tariff news worsen for Switzerland. The positive risk sentiment, with global stock indices approaching yearly highs, also decreases the demand for the safe-haven Swiss Franc. This situation makes it tough for the franc to gain significant value on its own. Therefore, the pair’s direction in the coming weeks will likely be a balancing act between Fed policies and risks specific to Switzerland. Given these mixed signals, traders should be ready for sharp moves driven by news rather than a smooth trend. Strategies that take advantage of increased volatility, like buying long straddles, could be useful ahead of the next FOMC speeches. This tactic allows traders to benefit from a substantial price shift, no matter the direction. Create your live VT Markets account and start trading now.

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