Swiss Franc: Range Trading as the Optimal Investment Strategy

Executive Summary

TradingKey - The Swiss Franc faces counteracting bullish and bearish pressures. Bullish factors stem from uncertainties surrounding U.S. tariff policies and geopolitical risks, bolstering the Franc’s safe-haven appeal during heightened global economic uncertainty. On the bearish side, Switzerland’s economic slowdown and persistently low policy rates weigh on the currency. Significant Franc appreciation may also prompt intervention by the Swiss National Bank (SNB) to weaken it. Given these dynamics, the USD/CHF pair is likely to trade within a range in the near term. In terms of investment strategy, investors should closely monitor the 0.78 low and 0.84 high of this currency pair. A drop below 0.78 could trigger SNB intervention, weakening the Franc and potentially sparking a sharp rebound in USD/CHF. Conversely, if USD/CHF nears 0.84, global uncertainties may drive Franc appreciation, leading to a pullback in the pair. Investors can capitalise on these opportunities using financial instruments such as USD/CHF ETFs, futures, options, contracts for difference (CFDs), or spread betting, employing a strategy of entering at lower levels and exiting at higher levels.

Source: TradingKey

* Investors can directly or indirectly invest in the foreign exchange market through passive funds (such as ETFs), active funds, financial derivatives (like futures, options and swaps), CFDs and spread betting.

1. Recent Forex Trends

The Swiss Franc’s safe-haven status is reinforced by Switzerland’s neutrality, political and economic stability, longstanding financial privacy, and the Swiss National Bank’s robust intervention capabilities. Since late 2022, persistent global uncertainties—driven by the Russia-Ukraine conflict, Middle East instability, and unpredictable U.S. policies—have propelled the Franc’s strength, pushing the USD/CHF pair to a 10-year low (Figure 1). The announcement of Trump’s “reciprocal tariff” policy on 2 April 2025, dubbed “Liberation Day,” followed by inconsistent policy shifts, has heightened market volatility. In the context of ongoing de-dollarisation, the Swiss Franc has outperformed the U.S. dollar as a safe-haven asset, driving its recent upward momentum.

Figure 1: USD/CHF Since 2022

Source: Refinitiv, TradingKey

* For related information, refer to the article published on 10 July 2025, titled “Is the Weak Dollar Trend Reversing? De-Dollarization Continues — IMF Data Shows Decline in Dollar Reserves”

2. Drivers of Swiss Franc Strength

Looking ahead, the Swiss Franc’s bullish outlook is primarily driven by global political and economic uncertainties. First, U.S. tariff policies under Trump exhibit a mix of unpredictability (due to frequent policy reversals) and certainty (from the persistent negative impacts of high tariffs), sustaining demand for the Franc as a safe-haven asset. Second, geopolitical instability remains a major global risk factor. Ongoing conflicts, including the Russia-Ukraine war, Israel-Palestine tensions, and recent Iran-Israel conflicts, continue to cloud regional and global economic outlooks. A potential re-deterioration in geopolitical conditions—especially in the Middle East, where disruptions to the Strait of Hormuz could occur—would further catalyse the Swiss Franc’s appreciation.

3. Drivers of Swiss Franc Weakness

Switzerland’s robust GDP growth in Q1 2025, driven by a pre-tariff export surge, is not sustainable. In Q2 and Q3, the fading of this export rush, combined with the potential impact of high U.S. tariffs under Trump, is likely to constrain Switzerland’s exports, production, and investment, dimming its economic outlook. Amid slowing growth and persistently low inflation, the Swiss National Bank is expected to keep its policy rate at 0% through year-end, with the possibility of further cuts into negative territory. This combination of weak economic growth and ultra-low interest rates will create dual economic and policy pressures, weighing on the Swiss Franc’s value.

Should the Swiss Franc’s rapid and excessive appreciation threaten Switzerland’s economy, the Swiss National Bank (SNB) is likely to intervene in the foreign exchange market. The SNB has a proven track record of effective intervention. For instance, in August 2011, its actions led to a sharp depreciation of the Franc, with USD/CHF and EUR/CHF rising by 27% and 20%, respectively, within two months (Figure 3). If the SNB intervenes again, the resulting downward pressure on the Franc could overwhelm all bullish factors, driving a significant and sustained decline in its value.

Figure 3: CHF Depreciation from August 2011

Source: Refinitiv, TradingKey

4. Investment Strategies

Global economic uncertainties, alongside Switzerland’s domestic economic and monetary policy dynamics, create counteracting pressures on the Swiss Franc, likely resulting in sustained volatility for the USD/CHF pair. Investors should closely track this range-bound movement, focusing on the key levels of 0.78 and 0.84 (Figure 4). A drop below 0.78 could prompt intervention by the Swiss National Bank (SNB), weakening the Franc and potentially sparking a sharp rebound in USD/CHF. Conversely, if USD/CHF nears 0.84, global uncertainties are expected to drive Franc appreciation, leading to a pullback in the pair. Investors can capitalise on these opportunities using financial instruments such as USD/CHF ETFs, futures, options, contracts for difference (CFDs), or spread betting, employing a strategy of entering at lower levels and exiting at higher levels.

Figure 4: USD/CHF Investment Strategies

Source: Refinitiv, TradingKey

* For further details supporting our foreign exchange market views, please refer to the macroeconomic section below.

5. Macroeconomics

Switzerland’s real GDP in Q1 2025 recorded a robust year-on-year growth of 2%, up 0.5 percentage points from Q4 2024 (Figure 5.1). This surge was largely fuelled by a pre-tariff export boom, particularly in pharmaceuticals. However, excluding exports, the economic picture was mixed: resilient construction investment was counterbalanced by subdued consumer spending and lacklustre equipment investment.

For Q2 and Q3, we see little basis for expecting significant improvement in non-export economic sectors. Coupled with the waning pre-tariff export boom and the threat of elevated U.S. tariffs under Trump, Switzerland’s economic prospects look dim. More specifically, tariffs on Swiss goods could rise from 10% to as much as 31%, hampering exports, production, and investment. Early signs of a slowdown are already apparent, with the KOF Leading Indicators Index falling from 103.9 in March to 96.1 in June (Figure 5.2).

On 19 June, the Swiss National Bank (SNB) reduced its policy rate by 25 basis points to 0%, in line with expectations. Given the ongoing economic slowdown and persistently low inflation (near 0%), we expect the SNB to hold the policy rate at 0% through year-end, with the possibility of further cuts into negative territory.

Figure 5.1: Switzerland Real GDP (%, y-o-y)

Source: Refinitiv, TradingKey

Figure 5.2: Switzerland KOF Leading Indicators Index

Source: Refinitiv, TradingKey

Get Started