USD/CHF edges higher as Dollar steadies

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The Swiss Franc (CHF) trades on the back foot against the US Dollar (USD) on Wednesday, as the Greenback finds some footing after coming under sustained pressure earlier this week. At the time of writing, USD/CHF is trading around 0.7940, snapping a three-day losing streak.

USD/CHF edges higher as the Dollar finds modest support.
SNB Chair Schlegel says negative inflation in 2026 would not worry the central bank.
Broader sentiment stays fragile amid trade tensions and political risks in the US.

Apart from the modest uptick in the US Dollar, the move appears largely technical in nature, reflecting short-covering and mild profit-taking after the pair’s recent decline.

That said, broader market sentiment remains fragile amid lingering trade tensions between the United States and the European Union, after President Donald Trump recently threatened tariffs as part of his push to gain control of Greenland.

Some of those tensions eased after Trump said during his speech at the World Economic Forum in Davos that he would not use force to acquire Greenland, prompting a modest improvement in risk appetite and easing safe-haven flows into the Franc.

However, upside in USD/CHF may remain limited, as Trump’s protectionist trade agenda and interference with Federal Reserve (Fed) independence continue to fuel “Sell America” narratives, weighing on confidence in US assets.

Trump again criticised Fed Chair Jerome Powell, saying he is “very late” on interest rates and accusing him of raising rates and “stopping us from success.” Trump also said he expects to announce a new Fed chair in the not-too-distant future.

All eyes now turn to Washington, where the US Supreme Court is due to hear arguments at 15:00 GMT in a case linked to President Trump’s efforts to remove Fed Governor Lisa Cook.

Meanwhile, Swiss National Bank (SNB) Chairman Martin Schlegel said at the World Economic Forum in Davos that Swiss inflation could turn negative in some months in 2026, but stressed this would not be a problem for the central bank, which remains focused on medium-term price stability.

Looking ahead, traders await the delayed Personal Consumption Expenditures (PCE) inflation data and the annualized third-quarter Gross Domestic Product (GDP) figures due on Thursday.

Swiss Franc FAQs

What key factors drive the Swiss Franc?

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.

Why is the Swiss Franc considered a safe-haven currency?

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.

How do decisions of the Swiss National Bank impact the Swiss Franc?

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.

How does economic data influence the value of the Swiss Franc?

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.

How does the Eurozone monetary policy affect the Swiss Franc?

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.