US Dollar recoups recent losses as Swiss Franc edges lower

• Disappointing US technology earnings weigh on confidence in the AI trade, but renewed US Dollar support lifts USD/CHF.
• Falling Swiss 10-year bond yields accompany heightened Middle East geopolitical risks, which may bring further Swiss Franc gains.
• Higher oil prices and earlier currency weakness have lifted inflation without wider domestic spillovers, according to the SNB Minutes.

At around 0.8210 in Friday’s Asian session, USD/CHF is edging higher after three consecutive days of declines. The modest advance comes as the US Dollar (USD) recoups its losses for the day, even as questions grow over whether the AI trade can be sustained. Quarterly US earnings from several megacap technology companies fell short of expectations, denting investor confidence.

Heightened conflict in the Middle East has also fuelled risk aversion across markets. According to reports, the US and Israel are preparing further military strikes against Iran after the forthcoming midterm elections. Those reports have strengthened demand for safe havens, supporting both the Japanese Yen and the Swiss Franc against the Greenback.

Against this backdrop, Federal Reserve (Fed) officials have shown little inclination to speed up monetary tightening. Although Fed Chair Kevin Warsh recently voiced optimism about the US economy’s underlying resilience, he gave no indication of whether further interest rate increases would be necessary. Despite that measured message, pricing tracked by the CME FedWatch Tool currently puts the probability of rates remaining unchanged at the forthcoming 27–28 October policy meeting at 92.8%.

Further ahead, safe-haven inflows could support the Swiss Franc (CHF), leaving USD/CHF vulnerable to additional losses. Demand for safety amid persistent worries about Europe’s fiscal outlook helped push the Swiss 10-year government bond yield down to near 0.48%.

Swiss policymakers identified mounting inflationary pressures but no widespread spillovers into the domestic economy, recent SNB meeting minutes showed. They attributed the increase chiefly to more expensive oil and earlier franc weakness. With inflation stable within target ranges, Chair Martin Schlegel said no policy adjustment was currently needed, and the Swiss National Bank left its policy rate at 0%. Economists anticipate unchanged rates through 2027, whereas financial markets are pricing in the possibility of an increase in early 2027.

USD/CHF remains under bearish pressure as UOB retains downside targets

With recent price movements broadly matching their previous guidance, UOB Group strategists retain a cautious outlook for USD/CHF over the next 1–3 weeks. They point back to last Friday, 16 October, when spot was near 0.8280 and they warned that “downward momentum is building and if USD closes below 0.8245, it could decline toward 0.8225.” A subsequent fall to a low of 0.8215 prompted an updated assessment on Monday, 19 October. With spot then around 0.8240, UOB said USD “could decline further to 0.8200.” The bank says it will “maintain our view as long as USD holds below 0.8275,” retaining that threshold as “strong resistance” after previously placing it at 0.8290.

(The technical analysis of this story was written with the help of an AI tool. Know more.)