Swiss Franc hits fresh low since May 2025, near 0.8300 vs USD amid Fed-SNB divergence
- USD/CHF prolongs its uptrend for the fourth straight day amid a combination of factors.
- The Fed-SNB rate gap undermines the CHF and supports spot prices amid a bullish USD.
- Rising Fed hike bets, elevated US bond yields and geopolitical risks underpin the buck.
The USD/CHF pair attracts some follow-through buying for the fourth straight day, hitting a fresh high since May 2025 during the Asian session on Monday. Bulls now await acceptance above the 0.8300 mark before positioning for further gains amid a supportive fundamental backdrop.
The Swiss Franc (CHF) has been underperforming against its American counterpart on the back of the widening interest rate gaps between the Swiss National Bank (SNB) and the US Federal Reserve (Fed). In fact, the SNB kept its key policy rate unchanged at 0% during its September meeting, citing global oil price dynamics and regional uncertainties. In contrast, the US central bank maintained a comparatively hawkish policy outlook following the widely expected 25 basis points (bps) rate hike earlier this month.
Moreover, energy-driven inflation risks underpin prospects for further Fed tightening and keep US bond yields elevated near multi-year highs. This, along with persistent geopolitical uncertainties, benefits the US Dollar's (USD) reserve currency status and lends additional support to the USD/CHF pair. In the latest developments surrounding the Middle East crisis, US President Donald Trump on Saturday rejected an Iranian proposal to fully open the Strait immediately upon meeting their terms and end fighting.
Furthermore, Trump said on Sunday that additional military strikes on Iran were possible before the midterm elections in the US. Adding to this, the Houthis in Yemen and Iran continued their attacks on Saudi Arabia, prompting traders to again price in the geopolitical risk premium. This favors USD bulls and suggests that the path of least resistance for the USD/CHF pair remains to the upside. Traders now look to speeches from influential FOMC members for some impetus later during the North American session.
USD/CHF daily chart
Technical Analysis
The USD/CHF pair holds comfortably above the 200-day Simple Moving Average (SMA) at 0.7951, which suggests a firmly bullish near-term tone as buyers maintain control over the broader trend. On the downside, initial structural demand is seen at 0.8200 ahead of the 200-day SMA at 0.7951, which should act as a key pivotal zone on any corrective pullbacks.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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