USD/CHF is trading near 0.7950, recovering losses from the previous session, as the US Dollar strengthens before the University of Michigan Consumer Sentiment Index release. US inflation figures from November suggest potential Federal Reserve rate cuts, which may limit the US Dollar’s rise.
The US Consumer Price Index (CPI) softened to 2.7% in November, below the expected 3.1%. The core CPI rose by 2.6%, marking the slowest pace since 2021. President Trump indicated a preference for a Federal Reserve Chair who advocates for lower interest rates.
Switzerland’s trade surplus in November reached CHF 3,841 million, with exports increasing 1.6% month-on-month and imports declining 0.8% due to reduced chemical and pharmaceutical purchases. The Swiss National Bank is unlikely to return to negative interest rates due to potential negative impacts on savers.
Swiss Franc and the Global Market
The Swiss Franc (CHF), a top ten traded currency globally, is a safe-haven asset sought during market stress due to Switzerland’s stable economy. The Swiss National Bank meets quarterly, targeting inflation below 2%. Higher interest rates can strengthen the CHF, while macroeconomic data from Switzerland and the Eurozone influence its value. Switzerland’s economic fortunes are closely tied to the Eurozone, with a 90% correlation suggested between the Euro and Swiss Franc.
Looking back to late last year, the USD/CHF was trading near 0.7950, but the underlying weakness in the US dollar has since pushed the pair lower. As of today, December 19, 2025, we see the rate hovering closer to 0.7700. This downtrend reflects the Federal Reserve’s actions throughout this year, which saw two separate 25-basis-point rate cuts in response to slowing economic growth.
The cool US inflation data from November 2024, which showed CPI at 2.7%, was a clear early signal for this policy shift. We have now seen the US Core PCE, the Fed’s preferred inflation gauge, consistently print below 2.5% for the last two quarters of 2025. This confirms that the disinflationary trend was not temporary, keeping pressure on the dollar.
On the other hand, the Swiss National Bank has held its policy rate steady throughout 2025, citing persistent domestic inflation that has averaged 2.2% this year. The strong trade surplus mentioned last November has also continued, with Swiss exports to the Eurozone growing a further 3% year-over-year according to the latest data. This policy divergence between a cutting Fed and a steadfast SNB should continue to favor the franc.
Investment Strategies Amidst Currency Trends
For derivative traders, this environment suggests that positioning for further downside in USD/CHF is the primary strategy. We believe buying Swiss Franc (CHF) call options or US Dollar (USD) put options with expiries in the first quarter of 2026 offers a favorable risk-reward profile. This allows traders to capitalize on the expected continuation of the current trend.
However, we must recall the market turmoil when the SNB abruptly removed the euro peg back in 2015. With one-month implied volatility for USD/CHF sitting near multi-year lows of 4.5%, option premiums are relatively inexpensive for hedging against unexpected policy shifts. A long straddle or strangle could be a prudent way to protect against a surprise move during the next SNB meeting in March 2026.
The Swiss Franc’s traditional safe-haven status has also been a factor this year, particularly with renewed trade tensions in Asia and political uncertainty ahead of next year’s French elections. These global risks provide a fundamental tailwind for the franc that is independent of central bank policy. We see these factors reinforcing the case for being long CHF against the USD in the coming weeks.
