The USD/CHF pair edged higher as the US Dollar found support, trading around 0.7940 and snapping a three-day decline. Swiss National Bank Chair Schlegel stated that potential negative inflation in 2026 would not concern the central bank.
Broader market sentiment remains fragile due to trade tensions and US political risks. Although tensions eased after Trump’s Davos speech, his trade agenda and interference with the Federal Reserve still pressure US assets.
Trump Fed Chair Criticism
Trump criticised Fed Chair Jerome Powell over interest rates and may announce a new Fed chair soon. Attention now turns to a US Supreme Court case related to Trump’s efforts to remove Fed Governor Lisa Cook and upcoming US economic data.
The Swiss Franc is a safe-haven currency due to Switzerland’s stability. Its value depends on economic health, market sentiment, and SNB actions, among other factors.
The SNB meets quarterly to decide on policy, aiming for inflation under 2%. Economic data and Eurozone policies also significantly impact the Swiss Franc. Switzerland’s economy is heavily linked to the Eurozone, with a high correlation between the Swiss Franc and Euro.
As we look back to this time in 2025, the Swiss National Bank’s predictions are now our reality. SNB Chair Schlegel’s comments in Davos about tolerating negative inflation in 2026 have proven accurate. Recent data for December 2025 showed Swiss CPI dipping to -0.1% year-over-year, confirming this trend.
Sell America Narrative
The “Sell America” narrative, fueled by political turmoil throughout 2025, continues to weigh on the US Dollar. The persistent political uncertainty in Washington and pressure on the Federal Reserve we saw last year has kept long-term investors wary. This has suppressed any significant dollar rallies against safe-havens.
This creates a tricky situation for the Swiss Franc, which is being pulled in two directions. While the SNB’s dovish stance should weaken the currency, persistent global risk aversion keeps driving safe-haven inflows. For derivative traders, this suggests that implied volatility in USD/CHF options may remain elevated, presenting opportunities.
Given the current USD/CHF level around 0.7850, we believe downside risks persist for the pair. Traders could consider buying put options to speculate on a further drop, or using put spreads to cheapen the cost of entry. The technical rebound we saw from the lows around 0.7940 last January now seems like a distant memory.
In the coming weeks, attention will turn to the upcoming US jobs report and CPI figures. Any sign of further weakness in the US economy could accelerate the dollar’s decline. Conversely, a surprisingly strong print may offer only temporary relief for the greenback.
