The USD/CHF exchange rate remains under pressure this year as demand for the Swiss franc rises and the US dollar index crashes. After peaking at 0.9198 in January, the pair has plunged by over 10% and moved into a correction. It has plunged to a low of $0.8230.
Switzerland’s GDP is doing well
The USD/CHF exchange rate has crashed in the past few days as the Swiss economy continued doing well.
Data released this week showed that the Swiss economy is growing at a faster pace than expected.
It expanded by 0.8% in the first quarter, higher than the first estimate by the statistics agency last month. It showed faster growth than the fourth quarter, which showed 0.6%.
These numbers mean that the economy has had the strongest growth rate in two years, helped by the soaring exports and robust services sector.
One reason for the export growth was front-loading by companies ahead of Donald Trump’s retaliatory tariffs.
Swiss authorities are now holding talks with the US on resolving some of the issues that the Trump administration have pointed out. They note that the main driver for the Swiss surplus is that the country plays a key role in the gold market. While Switzerland does not mine gold, it has the top refiners.
Authorities also hope to reach a compromise as the Trump administration on pharmaceuticals, its most important component of the economy. Trump has pledged to boost tariffs as he aims to bring back manufacturing to the US.
Actions by the Swiss National Bank have helped to boost the economy as it slashed interest rates from 1.75% in 2023 to 0.25%. The bank may push rates negative again as it attempts to devalue the currency now that inflation has moved to zero.
US dollar index weakness
The USD/CHF exchange rate has crashed because of the falling US dollar index (DXY), which has moved from $110 in January to $99 today.
This decline happened as investors questioned the role of the greenback because of Donald Trump’s policies.
Trump has implemented sweeping tariffs on all countries, and overnight, he pushed tariffs on steel and aluminium up to 50%, effectively blocking imports.
At the same time, Trump is championing the Big Beautiful Bill that will boost the deficit by over $5 trillion in the next decade. The bill was passed even after Moody’s downgraded the US credit rating, and the US public debt nears $37 trillion.
The next key catalyst for the USD/CHF pair will be the upcoming ADP jobs data, followed by the official nonfarm payroll report on Friday.
While important, these numbers mean will likely not change the Fed’s mind. Officials have hinted that the bank will maintain interest rates unchanged as they observe the impact of Trump’s tariffs on inflation.
USD/CHF technical analysis
USDCHF price chart | Source: TradingView
The daily chart shows that the USD/CHF exchange rate peaked at 0.9198 on January 13 and is currently at 0.8300. It formed a death cross on April 7 as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. This pattern often leads to more downside over time.
The pair has also formed an inverse cup-and-handle pattern, a popular continuation sign. It moved below the neckline at 0.8375 and retested it, confirming the bearish outlook.
Therefore, the pair will likely continue falling as sellers target the year-to-date low of 0.8043, which is about 2.43% below the current level. A break below that support will point to more downside, potentially to 0.800.
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