USD/CHF traded near 0.7729 on Tuesday, close to a one-week high, as the Swiss franc eased against a firmer US dollar. The US Dollar Index was near 97.40, up about 0.32%.
Recent US data supported the move, with the NY Empire State Manufacturing Index at 7.1 in February versus expectations of 6.0, down from 7.7 previously. The ADP Employment Change four-week average rose to 10.3K from a revised 7.8K (previously 6.5K).
Expectations for a near-term Federal Reserve rate cut have eased after stronger US Nonfarm Payrolls data and an Unemployment Rate that fell to 4.3% from 4.4%. The CME FedWatch Tool shows June as the most likely timing for the first rate cut.
Markets are watching the Fed’s Meeting Minutes on Wednesday, then Friday’s core PCE Price Index and the advance estimate of fourth-quarter US GDP. These releases may affect rate expectations and the dollar’s direction.
Reduced demand for safe-haven assets also weighed on the franc after a second round of US–Iran nuclear talks in Geneva. In Switzerland, CPI rose 0.1% in January, and the SNB’s target range is 0–2%, with markets expecting rates to stay unchanged in March and remain steady through 2026.
We remember looking at this situation back in February of 2025, when USD/CHF was trading near 0.7729. At that time, the market was pricing in Federal Reserve rate cuts to begin by June 2025 due to softening inflation. This created a bearish outlook for the US dollar against the Swiss franc.
A lot has changed over the last year, as the Fed only delivered two of the four anticipated rate cuts in the second half of 2025 before pausing. The US economy proved more resilient than we expected, a trend that has continued into this year. The US Dollar Index (DXY) reflects this shift, now trading firmly around 104.5, a significant climb from the 97.40 level seen this time last year.
Recent data from January 2026 is reinforcing the dollar’s strength and pushing back against hopes for further Fed easing. The latest Nonfarm Payrolls report showed a surprisingly strong gain of 210,000 jobs, while the most recent Consumer Price Index (CPI) report showed inflation ticking up to 3.2% year-over-year. This has led markets to drastically reduce the odds of a rate cut in March 2026.
Meanwhile, the Swiss National Bank has remained on hold, with Swiss inflation staying subdued at just 1.4% in the latest report. The diplomatic progress with Iran we saw in early 2025 has largely held, reducing the safe-haven appeal that often benefits the franc. This growing divergence in economic performance and monetary policy between the US and Switzerland is creating a clear trend.
Given this backdrop, we see the path of least resistance for USD/CHF as being to the upside in the coming weeks. The dollar’s yield advantage is widening again, making it more attractive to hold than the franc. Traders should consider strategies that profit from a stronger dollar against the franc.
Derivative positions should be structured accordingly to capture this potential upward movement. Buying near-the-money call options on USD/CHF, such as those with a 0.9000 strike expiring in April, offers a way to participate in the upside with a defined risk. For a more cost-effective approach, we could also look at implementing bull call spreads to finance the purchase of those calls.
