USD/CHF rose 0.37% on Monday to around 0.8060, as the US Dollar firmed even as markets pared back expectations for further Federal Reserve tightening following a weaker United States Nonfarm Payrolls report last week. Demand for the Greenback was also supported by ongoing geopolitical tensions in the Middle East, centred on the Strait of Hormuz. Markets, via the CME FedWatch tool, still imply a 76.9% chance of additional Fed rate hikes by year-end, while attention turns to the Federal Open Market Committee Minutes from the June meeting due on Wednesday.
Data releases were mixed. The ISM Services PMI edged down to 54 in June from 54.5 in May, in line with forecasts, with New Orders softer and Prices Paid lower, while the Employment Index improved. In Switzerland, unemployment increased to 3.1% in June from 3% in May, against expectations for it to hold at 3%, adding pressure to the Swiss franc.
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USD/CHF Gains on Policy Divergence and Swiss Labor Data
We are seeing the USD/CHF pair gain traction this week, currently trading around 0.9150 as of July 6, 2026. This move is fueled by a resilient US dollar and fresh data coming out of Switzerland. The unexpected rise in the Swiss unemployment rate is adding to the Swiss Franc’s weakness.
The Swiss unemployment rate unexpectedly ticked up to 2.3% for June, a slight increase from the 2.2% seen in May. While this is still historically low, it gives the Swiss National Bank more reason to continue its monetary easing path, having already cut rates earlier this year. This policy divergence from other central banks is likely to keep pressure on the Franc.
In the US, the latest ISM Services PMI came in at a solid 53.8, aligning with market expectations and showing continued economic resilience. The CME FedWatch tool shows markets are not pricing in further rate hikes but are anticipating the Federal Reserve will hold rates steady. There is a growing, roughly 35% probability, of a rate cut before the end of the year.
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Implications for Trading Strategy and Market Volatility
Given this divergence, we believe the path of least resistance for USD/CHF is upward in the coming weeks. Traders could consider buying call options to capitalize on this potential move, targeting strikes above the 0.9200 level. The upcoming FOMC minutes will be crucial for confirming if the Fed’s stance remains firm, which would further support this view.
Historically, the USD/CHF pair sees increased volatility when the monetary policies of the Fed and the Swiss National Bank diverge significantly, as they did in 2023 and 2024. We should therefore anticipate sharp movements around central bank announcements. This makes using defined-risk strategies, like bull call spreads, a prudent way to express a bullish view while capping potential losses.
