USD/CHF plunges to 14-year low as Fed easing bets hammer the US Dollar

• USD/CHF tumbles to its lowest level since September 2011, as the US Dollar comes under heavy pressure.
• Markets fully price in a 25 bps Fed rate cut, with focus shifting to Chair Powell’s tone and the updated dot plot.
• Political pressure adds to the Fed’s challenge, as Trump-backed Stephen Miran joins the Fed Board ahead of Wednesday’s decision.

The Swiss franc (CHF) surges to multi-year highs against the US Dollar (USD) on Tuesday as the Greenback faces intense selling pressure. The USD/CHF pair is trading around 0.7862 at the time of writing, down nearly 1.0% on the day and marking its lowest level since September 2011.

The decline reflects broad-based weakness in the US Dollar, which continues to reel ahead of the Federal Reserve’s (Fed) interest rate decision due on Wednesday. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is hovering just above the year-to-date low of 96.38 set on July 1, which also marked its lowest level since 2022.

Interestingly, stronger-than-expected US economic data did little to support the Dollar. Both August Retail Sales and Industrial Production, released earlier on Tuesday, topped forecasts, yet the Greenback remained under pressure, highlighting that markets are prioritizing the Fed’s expected policy shift over near-term data surprises.

With a 25-basis-point interest rate cut widely seen as a done deal, investors will be closely watching the Fed’s updated economic projections and dot plot. Speculation is building that the central bank may open the door to additional easing later this year, particularly as labor market indicators soften and inflation expectations moderate.

Adding to the pressure on the Greenback, the Fed’s monetary policy meeting takes place under unusual strain, with US President Donald Trump seeking greater sway over monetary decisions and legal challenges targeting the central bank’s leadership. On Monday, the Senate confirmed Stephen Miran to the Fed Board. Miran is expected to participate in Wednesday’s decision, and some analysts believe he could advocate for a larger rate cut than markets currently expect.

Meanwhile, the Swiss National Bank (SNB) is set to announce its next policy decision on September 25, with markets expecting rates to remain unchanged at zero. Officials have signaled greater tolerance for the franc’s appreciation, arguing that rising costs abroad reduce the extent of overvaluation in real terms. With Swiss inflation subdued and policymakers reluctant to reintroduce negative rates, the SNB is unlikely to act against the franc’s appreciation, leaving the policy divergence with the Fed firmly tilted in favor of the CHF.