USD/CHF softens below 0.7750 as Swiss Franc strengthens amid tariff uncertainty

USD/CHF softens below 0.7750 as Swiss Franc strengthens amid tariff uncertainty

USD/CHF Softens Below 0.7750 as Swiss Franc Gains Amid Tariff and Geopolitical Uncertainty

The USD/CHF pair fell below 0.7750 on February 23, 2026, as the Swiss Franc (CHF) strengthened amid escalating trade and geopolitical risks. U.S. President Donald Trump's announcement of a new 15% global import tariff, following the Supreme Court's rejection of his reciprocal tariffs, intensified concerns over a potential trade war, weighing on the U.S. dollar. Concurrently, heightened tensions between the U.S. and Iran, including speculation about limited airstrikes, boosted demand for safe-haven assets like the CHF.

Switzerland's currency has benefited from its status as a refuge during periods of global uncertainty. Political stability, a robust export sector, and low inflation—currently at 0.1%—have reinforced the CHF's appeal. However, the Swiss National Bank (SNB) faces challenges as a strong franc risks squeezing export-driven industries and exacerbating disinflationary pressures. SNB President Martin Schlegel acknowledged the complexity of balancing monetary policy, stating, "Further escalation... means more uncertainty... complicating monetary policy."

The SNB's policy tools, including potential negative interest rates or foreign exchange market interventions, remain constrained. While the central bank has signaled willingness to act if necessary, recent trade agreements with the U.S. to reduce tariffs from 39% to 15% have eased some pressures. Analysts note that the CHF's resilience is also supported by Switzerland's current account surplus and its historical correlation with the Eurozone's economic stability.

Market participants will closely watch the U.S. January Producer Price Index (PPI) data on February 29, which could influence expectations for Federal Reserve rate cuts and, consequently, USD momentum. Despite near-term volatility, experts predict the CHF will remain strong in 2026, citing structural advantages and persistent safe-haven demand.

In summary, the interplay of U.S. trade policies, geopolitical risks, and SNB constraints underscores the CHF's near-term strength, while the USD faces headwinds from uncertainty and divergent monetary policy trajectories.