The US Dollar has strengthened as trade tensions between the United States and China decrease. Optimism is rising around a potential trade deal at the upcoming meeting between US President Trump and China’s Xi Jinping.

The USD/CHF is trading around 0.7960, marking a 0.10% increase for the day. US Treasury Secretary Scott Bessent announced that 100% tariffs on Chinese goods are off the table, improving market sentiment and aiding the Dollar’s recovery.

Impact Of Federal Reserve Rate Cuts

Potential Federal Reserve rate cuts could limit the US Dollar’s rise. The market anticipates a 97% likelihood of a 25-bps cut this week, and a 96% chance of another cut in December, as tracked by the CME FedWatch tool.

In the US, the Consumer Price Index rose 3% YoY in September, moderating to 0.3% on a monthly basis. The Swiss Franc remains stable, supported by the Swiss National Bank’s decision against further monetary easing, indicating lack of deflation risks.

Attention is on upcoming US economic data and the Federal Reserve’s policy meeting. The prospect of a US-China trade breakthrough remains positive, maintaining the USD/CHF’s strength for the day.

The US Dollar has shown varying strength against major currencies today, being strongest against the Japanese Yen.

We are currently seeing USD/CHF trade near 0.9150, which is significantly higher than the sub-0.8000 levels we recall from the US-China trade war period. The primary driver today is the policy divergence between a potentially pausing Federal Reserve and a still-vigilant Swiss National Bank. This dynamic creates a different landscape than the coordinated easing environment we saw years ago.

Swiss National Bank’s Inflation Challenges

The latest US inflation data from earlier this month showed the Consumer Price Index at 3.5% for September 2025, cooling more than expected and increasing bets on a Fed policy pivot. Markets are now pricing in an 85% chance that the Fed will hold rates steady in December, according to the CME FedWatch Tool, a stark change from the rate cut expectations that once dominated. This shift suggests that using options to trade volatility around upcoming Fed announcements could be a prudent move.

In contrast, the Swiss National Bank is contending with persistent domestic inflation, which registered at 2.1% in the last report, still above their target. This makes the SNB unlikely to signal any policy easing, providing underlying support for the franc and capping significant upside for the USD/CHF pair. Selling out-of-the-money call options on USD/CHF could be a strategy to capitalize on this expected resistance.

The focus has shifted from the old US-China trade disputes to current tensions surrounding US and European Union digital trade frameworks. A lack of progress in recent talks is elevating market uncertainty and boosting the franc’s safe-haven appeal. Traders should consider buying short-dated puts to hedge against a sudden risk-off move that would strengthen the CHF.

Given this backdrop, implied volatility in the franc has been creeping higher ahead of year-end central bank meetings. A collar strategy, which involves buying a protective put and simultaneously selling an upside call, could allow traders to limit their downside risk on long dollar positions. This approach prepares a portfolio for either a surprise Fed announcement or a flare-up in geopolitical tensions.

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