USD/CHF Attempts Recovery Amid Policy Uncertainty and Technical Strength

Political tensions and policy concerns continue to shape currency market dynamics this week. Following President Trump’s remarks at the World Economic Forum in Davos about his approach to Greenland—clarifying that military force would not be pursued—risk sentiment experienced a brief uptick. This statement temporarily eased some of the anxiety that had been pressuring traditional safe-haven assets like the Swiss Franc (CHF). However, broader concerns persist, particularly around Trump’s protectionist trade agenda and ongoing disputes with the European Union over tariff measures, which continue to undermine confidence in US financial markets and cap gains for the USD/CHF pair.

Technical Positioning Supports USD/CHF Rally

The USD/CHF currency pair has begun recovering from a three-day decline, with the US Dollar regaining traction near 0.7940. This bounce is primarily attributable to technical factors, particularly traders covering short positions and crystallizing profits following the pair’s recent downward stretch. The rebound in the Greenback reflects typical market mechanics after periods of sustained selling pressure, though the rally may face headwinds from broader macro concerns.

Trade Tensions and Political Risk Weigh on Sentiment

The trade dispute environment remains a critical constraint on dollar strength. Trump’s campaign to assert greater economic control—evidenced by his tariff threats and regulatory approach—continues to spark “Sell America” sentiment across global markets. This has been compounded by Trump’s renewed criticism of Federal Reserve Chair Jerome Powell, accusing him of being too cautious with interest rate adjustments and suggesting the Fed has hindered economic progress. His indication of plans to appoint a new Fed chair in the near term adds another layer of policy uncertainty. Attention is now focused on Washington, where the US Supreme Court is scheduled to hear a case at 15:00 GMT related to Trump’s attempts to remove Fed Governor Lisa Cook from the central bank—a development that underscores the political friction surrounding monetary policy.

SNB Maintains Dovish Stance Despite Deflation Outlook

In Switzerland, Swiss National Bank (SNB) Chairman Martin Schlegel offered important guidance while speaking at Davos. He noted that inflation in Switzerland could briefly dip into deflationary territory for several months in 2026. However, Schlegel emphasized that such a scenario would not present a significant challenge for the SNB, as the institution remains focused on maintaining price stability over the medium term. This dovish commentary suggests limited pressure for the SNB to shift policy in the near term, which could indirectly support the USD/CHF pair by keeping the Swiss Franc relatively stable.

USD/CHF at Crossroads: Economic Data and Policy Clarity Ahead

Looking ahead, market participants are positioning for key economic releases scheduled for Thursday. The delayed Personal Consumption Expenditures (PCE) inflation data and third-quarter Gross Domestic Product (GDP) figures will provide crucial insights into the health of the US economy and could significantly influence the trajectory of the USD/CHF exchange rate. Until these data points are published and clarity emerges around Fed policy direction, the currency pair is likely to remain volatile, with USD/CHF consolidating as investors await fresh catalysts for directional moves.