Insights 
VT 
Swiss President Keller expressed disappointment following the US decision to impose a 39% tariff on Swiss imports. This tariff is higher than previously negotiated, affecting Swiss economic sectors, particularly machinery and watch industries, though pharmaceuticals remain unaffected.
Switzerland is maintaining contact with the US to address the issue. The country has no industrial tariffs and has already committed to investing in the US, making further concessions challenging.
Currency Fluctuations
The tariff situation coincides with fluctuations in the USDCHF, influenced by a weaker-than-expected US jobs report. Earlier, the currency pair reached a peak at 0.81732 but fell sharply below the 100-hour moving average of 0.80856 due to the US data. A swing area at 0.8054 to 0.80628 is now of interest, while the 200-hour moving average is at 0.80159.
We are seeing a conflict between short-term technicals and a new, powerful fundamental story. The weak US jobs report is temporarily pushing the US dollar down, but the surprise 39% US tariff on Swiss goods creates a significant headwind for the Swiss economy. This underlying weakness for the franc should outweigh the immediate dollar move in the medium term.
The impact of these tariffs on specific Swiss sectors will be severe and should not be underestimated. Reviewing 2024 trade data, we see the US was the single largest market for Swiss watches, with exports totaling over CHF 3.6 billion. A 39% tariff makes a huge portion of this trade unprofitable and pressures the Swiss economy directly.
Swiss National Bank Actions
Historically, the Swiss National Bank does not hesitate to act when faced with economic threats that could strengthen the franc. We only need to look back to its dramatic decision to unpeg the franc from the euro in 2015 to understand its willingness to intervene. The market should anticipate that the SNB will work to weaken its currency in response to this tariff news.
For derivative traders, this situation suggests buying call options on USDCHF for the coming weeks. This strategy allows for profiting from the expected rise in the currency pair, driven by a weakening franc, while capping potential losses if the US dollar’s weakness persists longer than expected. The current dip below the 100-hour moving average provides a more attractive entry point for these positions.
The key technical levels to watch are the swing area between 0.8054 and 0.8062, along with the 200-hour moving average at 0.80159. We would view signs of price stabilization at these support levels as a strong signal to initiate long-sided derivative plays. The tariff news should provide a floor for the pair, making a significant break below these levels less likely.
This clash of news will almost certainly increase implied volatility in the USDCHF pair. The unexpected tariff injects uncertainty, making options more expensive but also reflecting the greater potential for sharp price movements. Traders should factor this higher volatility into their strategies over the coming weeks.
