The currency pair USD/CHF continues to decline, falling under 0.7900 during Asian trading hours

The USD/CHF pair drops below 0.7900 as traders anticipate the Swiss ZEW Expectations survey. This decline marks the second consecutive trading day of losses for the pair amid Federal Reserve easing policy expectations.

Market participants are looking towards the upcoming US GDP data, projected at 3.2% for Q3, down from 3.8% in Q2. Additionally, the US ADP Employment Change and Q3 Core PCE data are also in focus.

Policy Debate
Stephen Miran from the Federal Reserve suggests that avoiding policy easing could risk recession, while Fed officials remain divided on future actions. Beth Hammack emphasises the current monetary policy’s suitability for a pause to evaluate the impact of rate cuts.

The Swiss Franc (CHF) is driven by factors such as market sentiment, economic health, and Swiss National Bank policies. The CHF is known as a safe-haven currency, reflecting Switzerland’s stability and economic strength, and is sensitive to Eurozone economic conditions.

Swiss National Bank actions directly influence CHF’s value, as monetary policy decisions can impact interest rates, affecting the currency’s attractive yields. Economic data releases are crucial in indicating potential shifts in CHF valuation, with the Swiss economy’s performance being closely monitored.

Fed Easing and CHF Strength
Switzerland’s reliance on the Eurozone integrates its economic health with Eurozone monetary stability, maintaining a high correlation between the CHF and Euro (EUR).

The drop in USD/CHF below the 0.7900 level is a clear signal that the market is pricing in more aggressive policy easing from the US Federal Reserve. We see this as a continuation of the trend that started in the third quarter of 2025, especially after the latest US Core PCE inflation data for November came in at a two-year low of 2.6%. This gives the Fed a green light to continue cutting rates to avoid a recession.

For derivative traders, this outlook supports strategies that profit from further USD weakness against the Swiss Franc. Buying put options on USD/CHF for the coming weeks is a direct way to position for this, especially with implied volatility currently stable around 8.5%. The upcoming Swiss ZEW survey will be the next catalyst, and a strong reading would likely accelerate the pair’s decline.

Looking back, the Fed’s pivot this year is a stark contrast to the aggressive hiking cycle we saw in 2022 and 2023. The Swiss National Bank, however, is in a different position, with domestic inflation holding firm at 1.4% last month, well within its target range. This policy divergence between a dovish Fed and a neutral SNB is the fundamental driver behind our bearish view on the pair.

We must also factor in the Swiss Franc’s safe-haven appeal, which is gaining traction as concerns about the Eurozone economy resurface. Recent data showing a slowdown in German manufacturing has prompted a flight to safety, benefiting the Franc. The high correlation between the CHF and the Euro means that Eurozone weakness often translates into relative CHF strength.

Heading into the final trading week of 2025 and early January 2026, we anticipate that lower holiday trading volumes could exaggerate market moves. We believe targeting put options with strike prices near 0.7800 and 0.7750, expiring in late January, is a sensible approach. This allows time for the market to react to the upcoming US jobs report for December, which is widely expected to show further cooling in the labor market.