The USD/CHF currency pair remained flat near 0.8090 during early European trading hours on Tuesday, as market participants awaited key US inflation data releases later in the week, specifically the Producer Price Index (PPI) and Consumer Price Index (CPI) reports [1]. According to the CME FedWatch tool, there is a 60.6% probability of another quarter-point rate hike by the Federal Reserve, while the Swiss National Bank (SNB) is widely expected to keep its policy rate anchored at 0% well into next year [1].
Geopolitical developments also played a role, with Iran threatening the US with 'economic warfare' and claiming to have fired an advanced missile at American warships, heightening concerns about further escalation in the Middle East. Such tensions typically support safe-haven currencies like the Swiss Franc (CHF), but this effect is being tempered by expectations of a steady SNB policy stance [1].
Analysts at Brown Brothers Harriman noted that despite a recent upside surprise in Swiss inflation, the market expects the SNB to remain on hold for an extended period. The swaps curve fully prices in a first 25 basis point hike to 0.25% only in June 2027, reflecting confidence that the SNB can keep rates at 0.00% for some time, as inflation remains well within the bank’s price stability mandate of less than 2% per annum. This outlook limits the extent to which the Franc can benefit from positive inflation surprises [1].
From a technical perspective, USD/CHF maintains a modestly bullish near-term bias, trading above the Bollinger middle band and the rising 100-day moving average. The Relative Strength Index (14) is just above 50, indicating steady but not aggressive upside momentum. Resistance is seen near the Bollinger upper band at 0.8175, while support is found at the Bollinger middle band at 0.8075, the 100-day moving average at 0.8000, and the lower Bollinger band at 0.7980 [1].
CONCLUSION
The Swiss Franc is steady as traders weigh Fed rate hike expectations against safe-haven flows driven by Middle East tensions. With the SNB expected to keep rates unchanged for an extended period, the CHF's upside appears capped despite recent inflation surprises. Market participants are closely watching upcoming US inflation data for further direction.