USD/CHF rebounds above 0.7900 despite increasing US-EU tensions
- USD/CHF advances as the US Dollar recovers daily losses despite escalating US–Greenland concerns.
- President Trump said there is “no going back” on his ambitions regarding Greenland.
- The EU signaled tariffs on $93 billion of US goods, as France urged deploying the bloc’s Anti-Coercion Instrument.
USD/CHF halts its three-day losing streak, trading around 0.7910 during the Asian hours on Wednesday. The pair gains ground as the US Dollar (USD) recovers its daily losses despite rising United States (US)–Greenland concerns.
However, the USD/CHF pair could weaken as the Greenback faces pressure from “Sell America” sentiment, while the safe-haven Swiss Franc (CHF) gains support from rising risk aversion. US President Donald Trump said there is “no going back” on his ambitions regarding Greenland, alongside earlier threats to impose new 10% tariffs on eight European Union (EU) countries, fueling concerns over slower economic growth.
Markets also fear that Europe could leverage roughly $10 trillion in US assets, with a Danish pension fund planning to exit Treasuries. European countries have pushed back, threatening new tariffs unless a Greenland deal is reached. The European Union signaled potential duties on $93 billion of US goods, while France reportedly urged the use of the bloc’s Anti-Coercion Instrument.
The US Dollar could have received support as the latest US labor market data have pushed back expectations for further Federal Reserve (Fed) rate cuts until June. Fed officials have signaled little urgency to ease policy further until there is clearer evidence that inflation is sustainably moving toward the 2% target.
Switzerland’s Producer and Import Prices declined 1.8% year-over-year (YoY) in December 2025, deepening from a 1.6% fall in November and marking the sharpest producer deflation since September. Monthly prices fell 0.2%, contrary to expectations for a 0.2% increase, but moderating from the prior 0.5% decline.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the 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 abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, 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 forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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