USD/CHF Tumbles as Traders Take Profits, Fed-SNB Divergence Lingers

The Swiss Franc (CHF) has been gaining against the US Dollar (USD), but traders are taking profits as the pair stays on track for a fourth straight weekly gain. The USD/CHF exchange rate briefly climbed above 0.8250 earlier this week, its highest level since May 2025, before turning lower on Friday.

The Federal Reserve's (Fed) hawkish interest-rate hike has driven the US Dollar's strength, but the Swiss National Bank's (SNB) policy divergence and carry-trade demand could keep the Franc under pressure. The Fed raised interest rates by 25 basis points to the 3.75%-4.00% range on Wednesday, with 16 of 18 officials expecting at least one more rate hike this year.

Kansas City President Jeffrey Schmid stated that inflation is trending above 3%, and price growth has been 'hot' across a broad range of goods and services. This gap between US interest rates and Switzerland's zero policy rate makes US Dollar-denominated assets more attractive, potentially leaving the Swiss Franc vulnerable to additional losses.