In August, Switzerland faced one of the highest US tariffs in the world. The 39% rate caused severe strain on the Swiss economy. However, talks about reducing import duties to 15% helped the franc. Let’s discuss this topic and make a trading plan for the USD/CHF pair.
The article covers the following subjects:
Major Takeaways
- The franc is on a roller coaster ride.
- The SNB could intervene in the Forex market.
- The Swiss franc is benefiting from its safe-haven status.
- The USD/CHF pair can be sold with targets of 0.792 and 0.787.
Weekly Fundamental Forecast for Franc
In 2025, the Swiss franc was fluctuating widely. In mid-September, USD/CHF quotes plunged to a 14-year low amid growing political and trade uncertainty and a weakening US dollar. However, a re-evaluation of market perspectives on the trajectory of the federal funds rate, coupled with a slowdown in Swiss inflation, prompted a shift in investor sentiment. The pair’s quotes surged to a 3-month high. However, speculation regarding a potential tariff reduction has tempered these expectations.
During the autumn, the franc’s strength was a dominant topic in the Forex market, with currency intervention being a key focus. Societe Generale noted that the risks associated with SNB intervention were at their highest, while UBS claimed that the central bank had already been purchasing foreign currency and selling the Swiss franc. Regulatory officials have indicated that they are prepared to take action, as this approach has been successfully employed in the past. Nevertheless, monetary policy remains the primary instrument of financial regulation.
The role of the Swiss National Bank in the surge of USDCHF quotes in late October and early November remains unclear. It is reported that the primary cause of the rally was the adverse impact of US tariffs on the Swiss economy. The 39% rate led to a slowdown in GDP alongside an uptick in unemployment. What is more concerning is the decline in inflation to 0.1%. This projection was not anticipated by any of the Bloomberg experts. The likelihood of the SNB reverting to a policy of negative interest rates increased significantly, prompting a decline in the value of the franc.
Swiss Inflation Change
Source: Bloomberg.
The divergence in monetary policy between Japan and Switzerland led to significant sell-offs of the Swiss franc by Japanese traders. They proactively increased their short positions, reaching record levels, in anticipation of the Bank of Japan increasing its overnight rate and the Swiss National Bank lowering its interest rate.
Speculative Positions on Swiss Franc
Source: Bloomberg.
As a result, the franc’s oversold condition proved advantageous for USD/CHF bears. Donald Trump has announced a reduction in tariffs, acknowledging that the current rate may be overly stringent and adding that Switzerland should remain successful. Although no specific figures were voiced, the Wall Street Journal has reported that the tariff rate will fall from 39% to 15%.
If the primary threat to the Swiss franc is addressed, it will likely regain its strength. This is particularly relevant in light of the increasing likelihood that the Supreme Court will eliminate universal tariffs. This news has led to an increased demand for safe-haven assets. However, the US dollar is currently regarded as a risky currency due to its high interest rates, and the yen is declining due to risk hedging when investing in Japanese stocks. Therefore, the franc remains the only safe-haven to buy.
Weekly USDCHF Trading Plan
Given the likelihood of a December federal funds rate cut amid a cooling US economy, a decline in the USD/CHF pair seems highly probable. While the pair trades below 0.8, short positions can be considered, with targets at 0.792 and 0.787.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of USDCHF in real time mode
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