USD/CHF Slips as Dollar Weakness Persists, But Further Declines May Be Capped

The USD/CHF pair came under renewed selling pressure on Friday, struggling to build on Thursday’s modest recovery. Trading near the mid-0.8000s, the pair remains close to the two-week low hit earlier this week, weighed down by a broad-based decline in the US Dollar.

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Dollar Weakness Drives the Move

Thursday’s hotter-than-expected US Producer Price Index (PPI) initially boosted the USD, but the reaction quickly faded as markets maintained firm expectations of a Federal Reserve rate cut in September. CME FedWatch data reflects growing confidence in a dovish pivot, prompting fresh greenback selling and pressuring USD/CHF.

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Risk-On Mood Limits Swiss Franc Gains

An extension of the US–China tariff truce by three months helped ease global trade war concerns, while optimism around an upcoming US–Russia summit kept market sentiment upbeat. This positive risk tone tends to reduce safe-haven demand for the Swiss Franc, helping limit USD/CHF’s downside.

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Trade Jitters Still a Headwind

Despite the risk rally, uncertainty remains over Switzerland’s trade outlook. A hefty 39% US tariff on Swiss exports continues to cloud the economic picture, given the US’s importance as a trading partner. This ongoing pressure could deter aggressive CHF buying and offer some support to USD/CHF.

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Outlook and Key Events Ahead

For now, traders remain cautious about chasing the downside without confirmation of stronger selling momentum. Attention turns to upcoming US data releases, including Retail Sales, the Empire State Manufacturing Index, and the University of Michigan Consumer Sentiment report. These figures could set the tone for USD/CHF’s next move.

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