Insights 
VT 
The USD/CHF pair has seen appreciation, reaching nearly 0.7950, as concerns about the Swiss economy persist. SECO has kept Switzerland’s 2025 GDP growth forecast to a below-average 1.3%, citing a broad slowdown in the year’s second half. Additionally, SECO has downgraded its 2026 GDP projection from 1.2% to 0.9%. The Swiss Trade Balance data, scheduled for release on Tuesday, is expected to provide further insight into Switzerland’s economic status.
Despite the USD/CHF pair’s gains, the US Dollar faces pressure due to a prolonged government shutdown now in its 19th day, with no resolution in sight. Senators have failed ten times to end the budget stalemate. Moreover, the US Federal Reserve is likely to implement further interest rate cuts, with markets pricing in almost a 100% chance of a reduction in October and a 96% chance in December.
Easing Trade Tensions
Easing trade tensions between the US and China could potentially stabilize the USD. President Trump expressed interest in China purchasing soybeans at previous levels, suggesting optimism for future trade agreements. The Swiss Franc continues to be influenced by Switzerland’s economic stability, high living standards, and its status as a global tax haven.
We see the USD/CHF pair hovering near 0.7950, a level caught between two conflicting pressures. On one hand, the Swiss Franc is weakening due to domestic economic concerns, while on the other, the US Dollar is facing its own challenges from a prolonged government shutdown. This dynamic creates a complex environment for traders, with the upcoming Swiss Trade Balance data on Tuesday being a key event to watch.
The persistent weakness in the Swiss Franc is supported by SECO’s grim outlook, which projects below-average GDP growth of just 1.3% for 2025 and an even lower 0.9% for 2026. This makes buying call options on USD/CHF an interesting strategy, as it would profit from further appreciation of the pair if the Franc continues to weaken. The latest September 2025 inflation data, which showed consumer prices rising only 1.1% year-over-year, further cements the view that the Swiss National Bank will be in no hurry to strengthen its currency.
However, any potential upside for USD/CHF is being challenged by significant issues in the United States. The government shutdown, now at 19 days, is creating economic uncertainty and is nearing the length of major historical shutdowns, like the 35-day lapse we saw back in 2018-2019. Furthermore, with the CME FedWatch tool showing a near-100% probability of a Fed rate cut this month, the dollar’s strength is being actively undermined.
Traders Strategies
Given these opposing forces, traders should consider strategies that account for potential volatility rather than a clear directional move. Buying put options on USD/CHF could serve as a valuable hedge against a sudden resolution to the US shutdown or if the Fed’s expected rate cuts begin to weigh more heavily on the dollar. This provides a safety net if the pair fails to break higher and reverses course.
Looking at the broader picture, we must acknowledge that the current 0.7950 level for USD/CHF is historically very low. For much of the period between 2015 and 2023, the pair frequently traded well above 0.9000. This context suggests that while there are immediate headwinds for the US dollar, the long-term potential for the pair to climb higher remains significant if Swiss economic underperformance continues to be the dominant theme.
