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The USD/CHF pair is faltering, slipping below 0.9100 on Tuesday, May 6, 2025, as the US Dollar wilts under pressure from President Donald Trump’s trade policies and a looming Federal Reserve decision. Switzerland’s flat inflation and growing expectations for a Swiss National Bank (SNB) rate cut are bolstering the Franc, while Federal Reserve Chair Jerome Powell’s upcoming remarks add uncertainty. With global tensions simmering, here’s why USD/CHF is under siege, what’s driving the decline, and where it’s headed next.
Dollar Buckles Amid Trade and Fed Jitters
The US Dollar Index, hovering near 99.74, is on track for a second day of losses, dragged down by fallout from Monday’s 5% Taiwan Dollar surge and Trump’s erratic trade signals. Trump’s mixed messages—ruling out near-term talks with China while predicting swift deals—have sparked volatility, undermining Dollar confidence. The Fed’s May 6-7 meeting, expected to hold rates at 4.25%-4.50%, offers little relief, with no updated forecasts until June. Powell’s press conference will be pivotal, as markets seek clues on rate cuts amid solid April data (ISM Services PMI at 51.6, Nonfarm Payrolls at 177,000) and a mixed Q2 GDP outlook (1.1%-2.3%).
Swiss Franc Gains on SNB’s Dovish Tilt
The Swiss Franc is holding firm as a safe-haven, despite Switzerland’s April CPI showing no year-over-year change and core inflation dipping to 0.6% from 0.9%. This weak inflation print has fueled bets for an SNB rate cut on June 19, with markets pricing in 40 basis points of easing, potentially pushing rates back into negative territory. The SNB’s deflation worries and readiness to intervene in FX markets are capping USD/CHF’s upside, as the Franc draws support from Europe’s geopolitical strains, including Germany’s recent chancellor election and ongoing conflicts in Ukraine and Gaza.
Technicals Signal More Pain for USD/CHF
The USD/CHF’s bearish bias is clear, with the pair testing the 0.9100-0.9050 support zone. A break below could target 0.9000, while resistance looms at 0.9150 and 0.9185, aligning with recent highs. Momentum indicators lean bearish, reflecting Dollar weakness and Franc strength. Unless Powell delivers a hawkish surprise or Trump’s trade rhetoric sparks a Dollar rally, the pair’s downward path looks set. The SNB’s dovish stance and safe-haven flows further tilt the scales against USD/CHF.
What’s Next for USD/CHF
The USD/CHF’s slide hinges on Powell’s tone and Trump’s trade moves. A dovish Fed could push the pair toward 0.9000, while a firm stance might offer temporary Dollar support, testing 0.9150. The SNB’s rate cut bets and geopolitical risks bolster the Franc, but upcoming US consumer confidence and Eurozone PMI data could sway sentiment. For now, USD/CHF is a trader’s tightrope—caught between Trump’s trade chaos, Powell’s policy signals, and Switzerland’s dovish drift. Stay sharp for the next catalyst.
