USDCHF has been trending down since late 2021 and is currently near the lower end of its trend channel. Low inflation and a weak dollar index have contributed to the downward pressure seen in 2025. The Swiss National Bank (SNB) has avoided reintroducing negative rates, and the latest inflation data may support keeping rates at zero. Yearly CPI remains at 0.2 percent, still in positive territory, but barely. According to SNB Vice Chair Antoine Martin, they do not see any risk of deflation at the moment, and forecasts suggest an uptick in inflation in the coming quarters. 

USDCHF 

Still, the 39 percent US tariff poses a significant problem for Switzerland, which counts the US as its largest single-country trading partner, or second if Europe is considered as a whole. This year’s weak dollar index, combined with very high tariffs, may create challenges for exporters. The saving grace is the exemption of gold and pharmaceuticals, which are by far Switzerland’s largest exports. According to the Financial Times, the effective average tariff is slightly above 12 percent. When combined with the Swiss franc’s 11 percent gain against the dollar, the burden on exporters remains heavy. 

Following the tariff shock, services PMI collapsed while manufacturing PMI held relatively steady. In Monday’s update, both manufacturing and services showed signs of recovery, although services PMI still indicated a rapid contraction. The data supports expectations for the SNB to hold rates at the September meeting. 

(USDCHF – Zoomed In) 

USDCHF bounced more than 2 percent from the lower boundary of the channel, breaking above the 2025 downward trendline before retesting it multiple times. The chart suggests USDCHF is attempting an upward reaction. If the SNB maintains its stance despite low inflation, that would be bullish for the franc, but a possible hawkish Fed rate cut at the September meeting are likely to have a larger effect on the currency and could trigger a breakout. The biggest obstacle is the 76.4 percent parallel of the trendline, currently at 0.8125, which may become the key resistance level to watch for USDCHF bulls.