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USD/CHF Pairs Gain Steam Following Trump’s Tariff Proposal Sparks Market Responses

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  • January 22, 2025
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The USD/CHF currency pair increased above 0.9050 and rebounded to 0.9070 early in European trading on Wednesday following a generally positive US Dollar as former President Donald Trump floated the idea of tariffs. Mr. Trump called for 25% duties on trading partners such as Canada, Mexico, China, and the EU due to economic and geopolitical reasons. Analysts suggest these actions could elevate inflation, reducing the likelihood of multiple Federal Reserve rate cuts this year, further supporting the USD. Meanwhile, geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas developments, have boosted safe-haven flows, potentially benefiting the Swiss Franc. However, the Swiss National Bank’s dovish stance, with rates at 0.5%, continues to weigh on the CHF, presenting a mixed outlook for the USD/CHF pair. KEY LOOKOUTS • Potential 25% duties on key trading partners could bolster USD strength and impact global trade dynamics. • Inflation risks might reduce the likelihood of multiple rate cuts in 2025, further supporting the USD. • Continued dovish stance, with interest rates at 0.5%, could weigh on the CHF despite safe-haven flows. • Ongoing Russia-Ukraine conflict and developments in the Israel-Hamas ceasefire talks remain crucial for safe-haven currency dynamics. The USD/CHF pair regained strength, climbing above 0.9050 and reaching 0.9070 during early European trading, fueled by a stronger US Dollar following former President Trump’s tariff announcements. Proposals for 25% duties on trading partners, including China, Mexico, and the EU, raised concerns over inflationary pressures, potentially limiting the Federal Reserve’s rate cuts this year and boosting USD demand. Meanwhile, the Swiss Franc faces mixed influences as geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas negotiations, support safe-haven flows, while the Swiss National Bank’s dovish stance, with rates at 0.5%, continues to weigh on the currency. This complex interplay of global trade policies, central bank strategies, and geopolitical developments will remain key to the USD/CHF outlook. The USD/CHF pair rebounded above 0.9050, driven by USD strength following Trump’s tariff proposals on key trading partners. Geopolitical tensions boost safe-haven flows, while SNB’s dovish stance weighs on CHF. • The pair rebounded above 0.9050, reaching 0.9070 during early European trading hours. • Announcements of 25% duties on trading partners like China, Mexico, and the EU boosted the US Dollar. • Potential tariffs could drive inflation, reducing the likelihood of multiple Federal Reserve rate cuts in 2025. • SNB’s dovish stance, maintaining rates at 0.5%, continues to weigh on the Swiss Franc. • Conflicts like Russia-Ukraine and Israel-Hamas influence safe-haven flows, supporting the CHF. • A tug-of-war between safe-haven demand for CHF and USD strength due to tariff expectations shapes the pair’s movement. • Investors are closely watching global trade developments, central bank policies, and geopolitical issues to gauge USD/CHF trends. The USD/CHF pair climbed above 0.9050 and reached 0.9070 during early European trading hours, recovering from a two-day losing streak. This rebound was fueled by a stronger US Dollar following former President Donald Trump’s announcement of potential tariffs on key trading partners, including China, Mexico, and the European Union. The proposed 25% duties by Trump are expected to start from as early as February, with inflationary concerns. Analysts believe that the Federal Reserve will then reduce the rate cuts anticipated for 2025 and support the USD further. Such trade policies indicate the impact they have on currency markets worldwide as the USD keeps gaining strength. USD/CHF Daily Price Chart. Source: TradingView Prepared By ELLYANA Meanwhile, the Swiss Franc faces a complex set of influences. On one hand, geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas ceasefire negotiations, have increased safe-haven demand, supporting the CHF. On the other hand, the Swiss National Bank’s dovish stance, maintaining rates at 0.5%, continues to weigh on the currency. This divergence creates a mixed outlook for USD/CHF, as global trade uncertainties and monetary policies play critical roles. Investors will closely monitor geopolitical events and central bank decisions to understand the pair’s future direction. TECHNICAL ANALYSIS From a technical analysis point of view, the USD/CHF pair’s recovery to 0.9070 may indicate a breakout from its recent consolidation phase. Key resistance levels lie at 0.9100, which, if broken, could indicate further bullish momentum towards 0.9150. On the downside, immediate support is observed near 0.9050, with a stronger floor at 0.9020. The Relative Strength Index (RSI) indicates neutral momentum, suggesting room for further upward movement if buying pressure persists. Additionally, the pair is trading above its 50-day moving average, reinforcing the bullish sentiment in the short term. However, any reversal below key support levels may shift the focus back to the bearish zone. FORECAST The USD/CHF pair has shown signs of recovery, with the potential for further upside if the US Dollar maintains its strength. Positive sentiment surrounding Trump’s tariff plans, coupled with expectations of limited Federal Reserve rate cuts, could support the USD. If the pair sustains momentum above the 0.9070 level, the next resistance at 0.9100 may come into focus, followed by a potential move toward 0.9150. Other bullish catalysts include better US economic data or increased inflation expectations, which may solidify the Federal Reserve’s less dovish position and strengthen the pair. On the other hand, downside risks to the USD/CHF pair still exist because of the safe-haven appeal of the Swiss Franc. Geopolitical tensions, such as the Russia-Ukraine conflict and Israel-Hamas negotiations, could increase demand for the CHF. If the pair fails to hold above the 0.9050 support, it may slide toward 0.9020 or lower, with a breach opening the door to further losses. Moreover, any unexpected dovish shift in US monetary policy or better-than-expected Swiss economic data could add downward pressure to the pair, reversing its recent gains.

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Currencies

USD/CHF Analysis: Struggling As Monetary Policies Diverge

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  • January 17, 2025
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The USD/CHF currency pair dropped during Friday’s European session and continued to stay near the significant support level of 0.9100 despite a strong US Dollar, buoyed by investor apprehension as Donald Trump’s inauguration draws near. The Swiss Franc traded stronger than its peers to cap off the week despite expectations of further monetary easing by the SNB to deal with low inflation. Meanwhile, the US Dollar gained amid anticipation of Trump’s economic policies and a minor increase in the US Dollar Index (DXY). On the technical front, the pair exhibits strong bullish momentum, with the Relative Strength Index (RSI) and moving averages favoring an upside toward 0.9300, though a breach below 0.9000 could signal further weakness. KEY LOOKOUTS • Despite SNB’s dovish stance, CHF gains momentum, outperforming major peers as market participants brace for potential interest rate cuts amid low inflation risks. • The Greenback holds firm ahead of Trump’s inauguration, buoyed by investor optimism over the economic policies that are to be announced soon, even as dovish Fed bets increase following soft CPI data. • USD/CHF is bullish with RSI in the overbought region, and a break above 0.9300 could be seen, but a fall below 0.9000 could lead to bearish moves. • Traders focus on geopolitical and policy developments, with heightened volatility expected as the Swiss Franc and US Dollar react to economic shifts and central bank actions. The USD/CHF pair faced downward pressure during Friday’s European session, testing the critical 0.9100 support level despite the US Dollar maintaining resilience ahead of Donald Trump’s inauguration. While the Swiss Franc gained momentum against its major counterparts, with market expectations of further rate cuts by the SNB to tackle low inflation risks, the US Dollar remained buoyant. Investor sentiment was cautiously optimistic, with the Greenback finding support in hopes of forthcoming economic reforms, including potential tax cuts and trade policies, despite softer-than-expected US CPI data. On technical levels, it has bullish trends. The pair shows upside movements to 0.9300 based on 14-week RSI, which can break anytime and drop it to the disadvantageous side under 0.9000 support. • As at Friday’s European session, this pair is currently close to holding support at around 0.9100 by the Swiss Franc over the US Dollar. • Interest rate cut by the SNB to check the risk from low inflation might continue to send CHF bullish; therefore, their appeal is better. • Despite softer December CPI data raising dovish Fed bets, the US Dollar remains supported by investor optimism ahead of Donald Trump’s inauguration. • Traders are cautiously optimistic about potential reforms, including tax cuts and tariffs, expected to impact market sentiment and the USD’s performance. • Indicators such as the 14-week RSI and the 20-week EMA suggest bullish momentum, with resistance levels near 0.9300 in sight. • Further downward moves are likely if the breach below the psychological 0.9000 level is maintained, with the pair targeting around 0.8958 and 0.8900. • USD/CHF’s course will be further complicated by the opposing monetary policy expectations between the SNB and the Federal Reserve, which will keep the market focused on economic news. The USD/CHF currency pair lost marginal ground during Friday’s European session as it hovered near the psychological 0.9100 support area, while the Swiss Franc led its peers in gains. The Swiss National Bank is, therefore, not expected to ease off its dovish stance going forward, despite markets expecting deeper interest rate cuts in a view to combat risks of inflation remaining below target levels. This stance has strengthened the Swiss Franc; however, there is a close attention on the economics of prolonged ease in monetary terms. Despite these advances, the negative for the duo has been curtailed by a resilient US Dollar, which draws strength from still cautious optimism toward President-elect Donald Trump’s ascension to office and the expectations that come with that of economic reform. USD/CHF Daily Price Chart Sources: TradingView, Prepared By ELLYANA In the US, the Greenback held firm with a softer than expected Consumer Price Index reading in December that left more room to bet on an accommodative Federal Reserve. The US Dollar Index (DXY) ticked higher, reflecting market confidence in Trump’s forthcoming policies, including possible tax cuts and trade initiatives. Technical indicators support a bullish outlook for USD/CHF, with the 14-week Relative Strength Index (RSI) suggesting strong momentum and a potential upside toward resistance levels at 0.9300. However, if the pair fails to hold above the psychological support of 0.9000, it could signal deeper corrections into November’s high of 0.8958 and December’s low of 0.8900. The differing monetary policy outlooks between the SNB and the Federal Reserve continue to shape the pair’s trajectory, keeping traders vigilant. TECHNICAL ANALYSIS The USD/CHF pair is trading near the critical support level of 0.9100, while technical indicators suggest a cautiously bullish bias. The 14-week Relative Strength Index (RSI) remains within the bullish range of 60-80, showing significant upward momentum, while the 20-week Exponential Moving Average (EMA) trends upward near 0.8900, bolstering the long-term uptrend of the pair. A break above the October 2023 high of 0.9244 can take the pair towards resistance at 0.9300 and the 16 March 2023 high of 0.9342. Conversely, a drop below the psychological support at 0.9000 could be a catalyst for further downside towards the November 2022 high of 0.8958 and the December 2022 low of 0.8900, which would make them two key levels that traders need to watch. FORECAST The USD/CHF pair will experience a blend of bullish and bearish action as it confronts some critical technical and fundamental factors. On the positive side, the duo may gather momentum if breaks decisively above the October 2023 high at 0.9244, opening the door for testing of round-level resistance at 0.9300. Further exhaustion may take the pair back to its 15-month high at 0.9342 as well with strong bullish gauges incorporating a rising 20-week EMA and an RSI in the robust momentum zone. Deeper gains will be further driven by investor optimism on contemplated US economic reforms and

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