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USD/CHF Dips as Fed Hike and Carry-Trade Shifts Stall Dollar Rally

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USD JPY CHF
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The USD/CHF exchange rate dropped to around 0.8245 on Thursday, nearing levels last seen in May 2025, as the Swiss Franc rebounded from six consecutive falling sessions and the US Dollar paused after its rally on Wednesday.

The Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75%, 4.00%, with 16 out of 18 policymakers expecting at least one more quarter-point rise before year-end, widening the policy gap with Switzerland where the Swiss National Bank holds its rate at zero.

Carry-trade dynamics have also shifted as expectations of a faster tightening cycle by the Bank of Japan reduce the appeal of borrowing in JPY.

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