The Swiss Franc (CHF) has advanced against the US Dollar (USD) following a recent sell-off, with USD/CHF extending its pullback on Monday after reaching 0.8263 last week, its highest level since May 2025 [1]. At the time of writing, USD/CHF trades around 0.8209, marking a third consecutive day of declines as market attention turns to the Swiss National Bank's (SNB) upcoming policy decision scheduled for Thursday [1].
The US Dollar Index remains near recent highs, trading around 100.40 after touching a seven-week peak of 100.56 on Friday. Hawkish expectations from the Federal Reserve (Fed) continue to support the US Dollar's near-term outlook, although a modest pullback in US Treasury yields—driven partly by falling Oil prices—has limited the Greenback's advance. The benchmark 10-year US Treasury yield is currently around 4.96%, down from last week's 5.04%, its highest since 2007. West Texas Intermediate Oil is trading at approximately $92, having declined for four consecutive days and reaching its lowest level in over a week [1].
Despite the recent drop, Oil prices remain elevated and continue to contribute to inflationary pressures. The Fed recently raised its federal funds rate by 25 basis points to 3.75%–4.00%, marking its first rate hike in three years. Most Fed policymakers maintain a hawkish stance, with the latest dot plot indicating that 16 of 18 officials anticipate at least one more rate hike this year. Chicago Fed President Austan Goolsbee stated on Monday that he would support lowering interest rates if there is "convincing evidence inflation is heading back to 2%" [1].
On the Swiss side, inflation is near the lower end of the SNB's price-stability range, which supports the case for keeping the policy rate at 0%. According to a Reuters poll published Monday, all 35 economists surveyed expect the SNB to hold its policy rate at 0% on September 24, and 16 of 24 economists anticipate rates will remain unchanged through 2027 [1]. The wide interest-rate gap between the US and Switzerland could restrict further gains in the Swiss Franc, which has been one of the worst-performing major currencies this year. The SNB's willingness to intervene against excessive currency strength also limits demand for the Franc [1].
CONCLUSION
The Swiss Franc has rebounded against the US Dollar ahead of the SNB's widely anticipated decision to keep rates unchanged. While hawkish Fed policy supports the Dollar, a wide interest-rate gap and SNB intervention potential may cap further Franc gains. Market participants are closely watching Thursday's SNB announcement for confirmation of the central bank's stance.