USD/CHF faces downward pressure as the Swiss Franc gains strength amid rising safe-haven demand.
The Swiss Franc is drawing support from fading expectations of further policy easing by the Swiss National Bank.
President Trump imposed a 30% tariff on imports from the European Union and Mexico.
USD/CHF remains subdued for the second successive session, trading around 0.7970 during the Asian hours on Monday. The pair struggled as the Swiss Franc (CHF) receives support from increased safe-haven demand amid ongoing global trade uncertainties, driven uncertain tariff concerns. Swiss Producer and Import Prices data for June will be eyed later in the day.
Additionally, the CHF draws support from wavering expectations of further Swiss National Bank (SNB) policy easing amid a renewed inflation risk. The SNB officials are expected to keep the interest rate steady at 0% in September, with many analysts forecasting that it will likely remain at that level through 2026.
Additionally, the USD/CHF pair faces challenges as the US Dollar (USD) declines amid escalating global trade tensions. US President Donald Trump announced, on Saturday, a 30% tariff on imports from the European Union (EU) and Mexico starting August 1. Trump also proposed a blanket tariff rate of 15%-20% on other trading partners, an increase from the current 10% baseline rate.
However, the European Union announced on Sunday that it will extend its pause on retaliatory measures against US tariffs until early August, in hopes of reaching a negotiated agreement. Reports also indicated that the EU has initiated discussions with other countries hit by the tariffs, including Canada and Japan, to explore coordinated responses.
However, the USD/CHF pair may appreciate as the US Dollar could regain its ground amid renewed market caution surrounding the Federal Reserve (Fed) policy outlook. Chicago Fed President Austan Goolsbee stated that ongoing trade policy at the hands of Trump's constant tariff threats could hamper the ability of the Fed to deliver rate reductions that both the broader market and Trump himself want to see.
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