The USD/CHF currency pair has seen an uptick, recovering from previous losses as geopolitical tensions and economic policies come to the forefront. Currently trading around the 0.9050 level during the Asian trading session, this increase can largely be attributed to strengthening in the US Dollar, following recent tariff announcements from President Donald Trump.
On Monday evening, President Trump outlined a plan to impose tariffs on a range of imported goods, including computer chips, pharmaceuticals, steel, aluminum, and copper. The objective of these tariffs is to promote domestic manufacturing by incentivizing production within the United States. Trump’s proposals reflect a desire to implement more aggressive trade policies, building on the rhetoric from his previous campaign, and raising the potential base tariff from the initially suggested 2.5% to levels “much bigger.”
Contributing to the USD’s strength is the uncertainty surrounding the implications of Trump’s trade and immigration policies. Analysts suggest that this uncertainty could lead the Federal Reserve to adopt a more cautious approach during their upcoming policy meeting. Investors may be watching closely to see how these developments might influence monetary policy moving forward.
The Swiss Franc has been under pressure, feeling the impact of the Swiss National Bank’s dovish stance regarding monetary policy. The SNB has suggested that while negative interest rates are not favored, they remain a possibility if economic conditions, particularly inflation, do not improve. With inflation rates within Switzerland recently noted at 0.6%, concerns around deflation are prompting discussions about the need for continued accommodative measures, thereby weakening the Franc against its US counterpart.
Overall, the combination of US tariff threats and SNB’s cautious stance has created a scenario where the USD/CHF pair could experience further upward momentum in the near term.
