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- USD/CHF depreciates as the US Dollar (USD) declines on Fed rate-hold bets in October.
- Safe-haven demand eases after US President Donald Trump ruled out immediate military strikes against Iran.
- Europe’s fiscal concerns and lower bond yields boosted the franc, while inflation remains tied to oil prices.
USD/CHF depreciates after registering over 0.5% gains the previous day, trading around 0.8230 during Asian hours on Monday. The pair loses ground as the US Dollar (USD) declines as the Federal Reserve (Fed) is widely expected to hold interest rates steady before potentially pursuing another rate hike in December.
According to the CME FedWatch Tool, markets are currently pricing in a 90.6% probability of a rate pause at the October 27–28 policy meeting, alongside a 79.7% chance of a hike in December.
Moreover, the Greenback faces challenges due to easing safe-haven demand, driven by US President Donald Trump ruling out immediate military action against Iran, stating, “there will not be a strike today,” according to Al Jazeera.
However, market anxiety persists over the possibility of strikes resuming after this week’s Israeli elections and next week’s US midterm elections, with reports indicating Iran is prepared to retaliate by targeting Israel and the UAE.
The Swiss Franc (CHF) gained strength as the yield on the Swiss 10-year government bond fell to 0.5%, driven by safe-haven demand amid growing concerns over Europe’s fiscal outlook. At the same time, Swiss National Bank (SNB) Meeting Minutes revealed that policymakers observed inflationary pressures with no signs of spillover effects into the broader economy, attributing the recent rise in inflation primarily to higher oil prices and the depreciation of the Franc.
Strategists at UOB Group maintain a cautious, negative stance on USD/CHF over the 1–3 week horizon, noting that they have “been holding a negative USD view since late last week.” In their latest update from Monday, 19 October, when the pair was trading around 0.8240, they highlighted that the Dollar “could decline further to 0.8200.” That move has since materialised, with USD/CHF breaking below 0.8200 yesterday and “reaching a low of 0.8190.”
UOB now judges that while the Dollar “could continue to decline,” the absence of “significant increase in downward momentum” casts doubt on whether the next downside objective at 0.8140 is attainable in the current move. On the topside, the bank flags 0.8250 as the key level to watch, reiterating that “a breach of 0.8250 (‘strong resistance’ level previously at 0.8275) would indicate that USD is not declining further.”
