Swiss Franc surges against US Dollar amid risk aversion, Fed policy concerns

• The US Dollar drops sharply against the Swiss Franc amid a risk-averse market environment.
• The Swiss Franc benefits from its safe-haven status, reinforced by Goldman Sachs’ assessment.
• Investors remain cautious ahead of the Federal Reserve’s policy decision and key US data.

USD/CHF trades around 0.7760 on Monday at the time of writing, down 0.70% on the day and marking its lowest level since September 2011. The pair remains under heavy pressure as the US Dollar (USD) weakens on intervention rumors in foreign exchange markets and growing concerns over the independence of US monetary policy.

The Greenback is under pressure following reports that the Federal Reserve (Fed) Bank of New York conducted a so-called rate check with major banks, requesting indicative exchange rates on the US Dollar against the Japanese Yen (JPY). According to Bloomberg and Reuters, such actions are often interpreted by markets as a preparatory signal for a potential intervention. This prompted investors to cut long US Dollar positions. Fears of coordinated action between the United States (US) and Japan to support the Japanese Yen are fueling caution across markets and weighing on the US Dollar against major currencies, including the Swiss Franc (CHF).

At the same time, the Swiss Franc finds structural support after Goldman Sachs said it remains the best-positioned global FX hedge against central bank subordination risks. The bank noted that, beyond its traditional safe-haven role, the Swiss currency stands out for its resilience to global inflation pressures. Goldman Sachs also highlighted Switzerland’s strong fiscal fundamentals, which enhance the CHF’s safe-haven appeal and help limit cross-market spillovers during episodes of fiscal stress.

The US Dollar is also suffering from expectations that the White House could announce the name of the next Federal Reserve Chair as early as this week, replacing Jerome Powell. US President Donald Trump recently reiterated that the announcement would be made in January. Names circulating among potential candidates include Kevin Hassett, Rick Rieder, Christopher Waller, Michelle Bowman and Kevin Warsh. Investors fear that a nominee perceived as close to the Trump administration could undermine the independence of the Fed, further denting confidence in the US Dollar.

This week, market attention also turns to the Fed’s monetary policy decision scheduled for Wednesday. According to the CME FedWatch tool, the central bank is expected to leave interest rates unchanged in the 3.50%-3.75% range, following three consecutive rate cuts totaling 75 basis points in 2025, justified by rising risks in the labor market. Early in the week, investors will also monitor the release of US Durable Goods Orders for November, duu later in the day, which could influence near-term US Dollar dynamics in an already highly volatile environment.