The US Dollar (USD) has gained significant ground against major currencies, including the Swiss Franc (CHF) and the Euro (EUR), driven by a hawkish policy outlook from the US Federal Reserve (Fed) [1][2]. The USD/CHF pair rebounded after four days of losses, trading around 0.8220 during Asian hours on Wednesday, as market participants priced in the possibility of another Fed rate hike before year-end. The CME FedWatch Tool indicated an 89.2% probability of a December rate increase, following a recent 25 basis point hike that brought the Fed's benchmark rate to the 3.75%–4.00% range [1].
In Switzerland, the current account surplus expanded sharply to CHF 23.7 billion in Q2 2026 from a downwardly revised CHF 10.2 billion in Q2 2025, marking the largest surplus since Q1 2025 [1]. Despite this positive macroeconomic data, expectations for the Swiss National Bank (SNB) remain dovish, with markets and a Swiss Bankers Association survey unanimously predicting the SNB will keep its key interest rate at 0% through the end of the year [1]. Analysts at UOB Group noted that while USD/CHF had recently surged to 0.8265, upward momentum has faded, and they now expect the pair to trade in a range between 0.8155 and 0.8255 over the next one to three weeks [1].
Meanwhile, the EUR/USD pair continued its decline for a third consecutive day, hitting a fresh low since July 29 at around 1.1425 during the Asian session on Wednesday [2]. The Euro has been pressured by rising political risks in Germany, which have overshadowed prospects for further rate hikes by the European Central Bank (ECB) [2]. Technical indicators reinforce the bearish outlook, with spot prices below key Fibonacci retracement levels and the 100-day Simple Moving Average, while the Relative Strength Index (RSI) at 29.7 suggests slightly overstretched conditions [2]. Immediate support for EUR/USD is seen at the 78.6% Fibonacci retracement near 1.1410, with further downside risk toward the prior swing low at 1.1329 [2].
A currency performance table shows the US Dollar appreciating 0.10% against the Swiss Franc and 0.55% against the Euro this week, underscoring the broad-based strength of the USD amid the current market environment [2].
CONCLUSION
The US Dollar's strength, fueled by expectations of further Fed tightening, has put pressure on both the Swiss Franc and the Euro, despite Switzerland's strong current account data. Market sentiment remains bullish for the USD, with technical and fundamental factors suggesting continued headwinds for the EUR and CHF in the near term.