The USD/CHF pair breaks its four-day winning streak, trading around the 0.7990 level during Asian business hours on Monday. The pair loses as the Swiss Franc (CHF) receives support from safe-haven demand amid rising geopolitical tensions. US President Donald Trump warned Tehran against using force against the demonstrators and indicated possible action if the repressive campaign intensified, while Iranian officials warned against any American or Israeli intervention.
Meanwhile, European countries led by the United Kingdom and Germany are considering increasing their military presence in Greenland to enhance security in the Arctic. Germany may propose a joint NATO mission, while British Prime Minister Keir Starmer urged allies to step up efforts in the far north, amid renewed comments by US President Donald Trump calling for US ownership of Greenland.
The Swiss franc could advance further as investors evaluate the policy outlook of the Swiss National Bank (SNB). Swiss inflation rose to 0.1% year-on-year in December 2025, marking the first increase since July but remaining near the lower end of the central bank’s 0-2% target range. This has reinforced expectations that the SNB is likely to keep interest rates at 0% at upcoming meetings, with inflation gradually rising alongside the economic recovery.
USD/CHF is falling as the US dollar weakens, perhaps amid concerns surrounding the Federal Reserve. Federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Jerome Powell related to the central bank’s renovation of its Washington headquarters and whether Powell lied to Congress about the scope of the project, The New York Times reported Sunday.
The dollar fell on the growing possibility of further US Federal Reserve interest rate cuts after the latest jobs report showed that job growth was below expectations in December. US nonfarm payrolls rose by 50,000 in December, lower than the 56,000 in November (revised from 64,000) and weaker than market expectations of 60,000. However, the unemployment rate fell to 4.4% in December from 4.6% in November.
Frequently asked questions about the Swiss franc
The Swiss Franc (CHF) is the official currency of Switzerland. It is among the top ten most traded currencies in the world, with its volume exceeding the size of the Swiss economy. Its value is determined by broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss franc was pegged to the euro (EUR). The peg was suddenly removed, causing the value of the franc to rise by more than 20%, causing turmoil in the markets. Although the peg is no longer in effect, the fortunes of the Swiss franc tend to be highly correlated with the euro due to the high dependence of the Swiss economy on the neighboring eurozone.
The Swiss Franc (CHF) is a safe-haven asset, or the currency that investors tend to buy during times of market stress. This is due to Switzerland’s perceived status in the world: a stable economy, a strong export sector, large central bank reserves or a long-standing political stance towards neutrality in global conflicts, making the country’s currency a good choice for risk-averse investors. Turbulent times are likely to strengthen the value of the Swiss franc against other currencies that are seen as riskier to invest in.
The Swiss National Bank meets four times a year – once every three months, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or expected to be above target in the foreseeable future, the bank will attempt to tame price growth by raising the interest rate. Higher interest rates are generally a positive for the Swiss Franc (CHF) because they lead to higher returns, making the country a more attractive place for investors. Conversely, low interest rates tend to weaken the Swiss franc.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can influence the valuation of the Swiss franc (CHF). The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or central bank currency reserves would lead to movements in the Swiss franc. In general, high economic growth, low unemployment and high confidence are good for the Swiss franc. Conversely, if economic data indicates weak momentum, the value of the Swiss franc is likely to decline.
As a small and open economy, Switzerland is highly dependent on the health of neighboring economies in the eurozone. The wider European Union is Switzerland’s main economic partner and a key political ally, so the stability of macroeconomic and monetary policy in the euro area is essential for Switzerland, and therefore for the Swiss franc (CHF). With such a dependence, some models suggest that the correlation between the fortunes of the euro (EUR) and the Swiss franc is over 90%, or close to perfect.
