USD/CHF retreats as US Dollar pulls back from multi-month highs
USD/CHF trades with a mild negative bias as the US Dollar eases after a two-day rally.SNB reiterates readiness to act against rapid Franc appreciation.Stronger-than-expected ADP employment data offers limited support to the Greenback.USD/CHF trades under mild pressure on Wednesday after choppy two-way price action, as the US Dollar (USD) eases following a two-day rally while traders assess Swiss inflation data alongside intervention warnings from the Swiss National Bank (SNB).
At the time of writing, USD/CHF is trading near 0.7800, retreating slightly after hitting a daily high around 0.7835 earlier in the European session.
The Swiss Franc (CHF) struggled to gain meaningful support from the latest inflation data, as rising concerns over excessive currency strength remain in focus. A stronger Franc lowers the domestic prices of imported goods while also dampening demand for Swiss exports, both of which tend to cool inflation.
Headline Consumer Price Index (CPI) rose 0.6% MoM in February, beating expectations of 0.5% and rebounding from the -0.1% decline recorded in January. On an annual basis, inflation held steady at 0.1%, above market expectations for a -0.1% reading.
The data support expectations that the SNB will keep policy accommodative, while reinforcing the view that the bar for returning to negative interest rates remains high.
SNB Vice Chairman Antoine Martin said on Wednesday, “Our willingness to intervene, our readiness to intervene is higher given the recent political events.” His remarks follow comments from the central bank earlier this week stating that it is “ready to intervene in the foreign exchange market to curb a rapid and excessive appreciation of the Swiss franc, which would jeopardize price stability in Switzerland.”
The renewed verbal intervention comes as the Swiss Franc strengthens on safe-haven demand amid the escalating US-Iran conflict. However, the US Dollar’s pullback on Wednesday limited further upside in the USD/CHF.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.81, easing after climbing to its highest level since November 28, 2025, near 99.68.
Meanwhile, upbeat US labor data offered little support to the US Dollar. ADP Employment Change showed private payrolls increased by 63K in February, up from 11K previously and above expectations of 50K.
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.
Why is the Swiss Franc considered a safe-haven currency?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.
How do decisions of the Swiss National Bank impact the Swiss Franc?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.
How does economic data influence the value of the Swiss Franc?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.
How does the Eurozone monetary policy affect the Swiss Franc?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.
