The Swiss Franc (CHF) gained against the US Dollar (USD), with the USD/CHF pair losing ground for the fourth consecutive day and trading around 0.8200 during Asian hours on Tuesday [1]. This depreciation of the US Dollar is attributed to increased risk-on sentiment, driven by optimism surrounding trade and diplomatic prospects, particularly the upcoming US-China summit, which traders are monitoring for signs of improved relations between the two largest economies [1]. Additionally, hopes for a diplomatic breakthrough in the Middle East have boosted investor mood, following news that Iranian President Masoud Pezeshkian will lead a delegation at the UN General Assembly and comments from US President Donald Trump indicating openness to a side meeting [1].
Strategists at UOB Group maintain a constructive 1–3 week outlook on USD/CHF, noting that while momentum remains strong, it is too early to determine if the USD will break above the 0.8300 level. They emphasize that only a breach of the 0.8185 support level would indicate that 0.8300 is not coming into view, and their assessment remains unchanged as of September 17 with spot around 0.8250 [1].
Despite the current weakness in the US Dollar, ongoing hawkish sentiment surrounding Federal Reserve (Fed) policy could support the Greenback. Fed's Musalem delivered a distinctly hawkish message, scoring 8/10 on the FXS Speechtracker, above the 7.4/10 historical average, and warned that without further policy restraint, inflation is likely to remain substantially above the 2% target even 18 months ahead. Musalem highlighted broad-based commodity shocks, underlying inflation near 3%, and business pricing plans anchored closer to 3%, all consistent with a preference for earlier and incremental rate increases [1]. The FXS Fed Sentiment Index rose by 0.42 points to 149.96, reinforcing that Fed rhetoric remains firmly in hawkish territory well above the neutral 100 threshold [1].
Fed’s Goolsbee also delivered a speech with heightened market relevance, scoring 7.4 on the FXS Speechtracker versus a historical average of 6.4, emphasizing optimism about returning to 2% inflation only if demand does not overheat [1]. These hawkish signals from Fed officials suggest that the policy stance continues to favor additional rate hikes, which is typically supportive of the Dollar against lower-yielding peers, though recent risk-on sentiment has weighed on the USD/CHF pair [1].
CONCLUSION
The Swiss Franc has strengthened against the US Dollar amid increased risk appetite and optimism over diplomatic developments, while hawkish Federal Reserve rhetoric continues to signal potential for further rate hikes. Although the USD/CHF outlook remains constructive according to UOB Group, ongoing risk-on sentiment and diplomatic prospects are currently weighing on the Dollar. Market participants should monitor upcoming events and Fed policy signals for further direction.