The USD/CHF currency pair gained ground on Monday, trading near 0.7930 during the Asian session, as the Swiss Franc (CHF) struggled due to lingering economic concerns.
Traders are closely monitoring developments in Switzerland’s domestic economy, with key indicators such as the Swiss Trade Balance poised to provide further direction. The Servelius team provides readers with expert insights and a complete overview of the matter.
USD/CHF Shows Resilience Amid CHF Weakness
For the second consecutive day, USD/CHF held its ground, supported by Swiss economic headwinds. The CHF has come under pressure as investors digest disappointing economic data and subdued growth forecasts. The market sentiment is skewed toward risk aversion, with traders adjusting positions in anticipation of key macroeconomic releases.
Analysts suggest that the Swiss Franc’s weakness is largely tied to sluggish domestic growth and concerns about external trade performance. The upcoming Swiss Trade Balance data, scheduled for release on Tuesday, is expected to provide additional impetus for CHF movements, particularly if the results indicate a widening trade deficit.
SECO Maintains Below-Average GDP Forecast
The State Secretariat for Economic Affairs (SECO) recently released its October outlook, keeping Switzerland’s 2025 GDP growth forecast unchanged at a below-average 1.3%. SECO highlighted a significant economic slowdown in the second half of the year, signaling persistent domestic challenges.
For 2026, SECO lowered its growth projection to 0.9% from 1.2% in June, reflecting structural economic headwinds and potential global uncertainties. These revisions underscore the Swiss economy’s vulnerability, fueling further CHF depreciation against major currencies, including the US Dollar (USD).
US Dollar Faces Pressure Amid Government Shutdown
Despite the CHF weakness, the upside for USD/CHF could be constrained as the US Dollar contends with domestic uncertainties. The ongoing US government shutdown, now in its 19th day, continues to weigh on USD sentiment.
Senators failed for the tenth time on Thursday to resolve the impasse, marking the third-longest funding lapse in modern US history. This prolonged government stalemate has heightened concerns about economic disruption, fiscal uncertainty, and market volatility, all of which limit USD strength.
Federal Reserve Rate Cut Expectations Weigh on USD
Adding to the pressure, the US Dollar faces challenges amid rising expectations of further rate cuts by the US Federal Reserve (Fed). According to the CME FedWatch Tool, markets now price in nearly a 100% probability of a Fed rate reduction in October and a 96% chance of another cut in December.
Such a shift in monetary policy expectations tends to weaken the USD, as lower interest rates reduce the currency’s yield advantage relative to other major currencies. Traders are likely to remain cautious, particularly as the Fed’s policy trajectory becomes increasingly dependent on inflation trends and economic data.
Trade Tensions Between the US and China Easing
Despite domestic USD challenges, some upside support may emerge from easing US-China trade tensions. US President Donald Trump indicated that he expects China to resume soybean purchases at previous levels.
Trump further noted that tariff reductions could be implemented if China engages in reciprocal trade actions, signaling potential progress in bilateral negotiations. This development could bolster risk sentiment, benefiting the USD as investors anticipate improved global trade dynamics and reduced geopolitical risk.
Key Technical Levels for USD/CHF
On the technical front, USD/CHF is currently consolidating around 0.7930, with resistance near 0.7950 and support at 0.7900. Traders are watching for breakouts in either direction, influenced by Swiss trade data, US fiscal developments, and Fed policy signals.
A sustained move above 0.7950 could open the door for further gains toward 0.8000, while renewed CHF strength on positive economic surprises or trade balance improvements could push the pair back toward 0.7900.
Market Outlook
The USD/CHF outlook remains nuanced, with mixed forces at play. On one hand, Swiss economic concerns and subdued growth projections are supporting the USD/CHF rally. On the other hand, the US Dollar faces headwinds from the government shutdown and potential Fed rate cuts, which could limit further upside.
Investors and FX traders will closely monitor upcoming economic data, including the Swiss Trade Balance and US economic indicators, to gauge the relative strength of the two currencies. Additionally, geopolitical developments and monetary policy guidance will likely remain key drivers for USD/CHF movements in the near term.
Conclusion
The USD/CHF pair has shown resilience near 0.7950, driven by Swiss economic concerns and growth revisions by SECO. While the CHF remains under pressure, the USD faces its own challenges from the prolonged government shutdown and potential Fed easing, keeping the pair in a delicate balance.
Traders are advised to monitor economic releases, policy signals, and trade developments, as these factors will likely shape near-term USD/CHF trends.
