The USD/CHF pair experiences a decline as the US Dollar weakens in response to unanticipated fiscal policy actions aimed at limiting the increase in Treasury bond yields. US Treasury Secretary Scott Bessent indicated buybacks exceeding $4 billion to demonstrate the disparity between elevated yields and genuine economic fundamentals. The SNB policy rate is maintained at 0%, with intentions to intervene to counteract excessive appreciation of the Franc. The USD/CHF has experienced a depreciation following two consecutive days of gains, currently trading near the 0.8000 mark during the Asian trading hours on Monday. The currency pair depreciates as the US Dollar struggles under pressure from newly announced fiscal measures in Washington.
Financial markets were taken by surprise when the US Treasury Department committed to at least doubling its buybacks of longer-dated government debt in an effort to mitigate the increase in bond yields. Treasury Secretary Scott Bessent indicated that these buybacks could exceed $4 billion, representing a strategic push to signal that elevated yields fail to accurately reflect underlying economic fundamentals. Analysts contend that the heightened emphasis of US authorities on bolstering the Treasury market should be viewed as a “risk-positive story,” with the bank anticipating that “volatility will stay low, and interest will remain firm in the carry trade.” This backdrop, in their view, continues to favour strategies that rely on stable funding conditions and subdued market fluctuations.
However, the Greenback’s downside may be constrained by rising safe-haven demand driven by escalating geopolitical tensions in the Middle East. Friction intensified following the dismissal of upcoming US sanctions by Iranian Foreign Minister Abbas Araghchi, who characterised them as an act of desperation. Concurrently, Iranian Security Chief Mohsen Rezaei cautioned of “earthquake-like” retaliation should US President Donald Trump pursue further actions, thereby reinforcing a risk-off sentiment across global markets. Meanwhile, the Swiss National Bank maintained its policy rate at 0% and is anticipated to uphold this position until 2027, reiterating its preparedness to engage in foreign exchange markets to mitigate excessive appreciation of the franc. While most economists anticipate the first-rate hike in early 2028, markets are already pricing in a move as early as March 2027. This shift could enhance the Franc’s appeal as a funding currency for carry trades.
In the daily chart, USD/CHF is positioned at 0.8000, maintaining a bearish near-term outlook as the price remains below both the short- and medium-term Exponential Moving Averages. The arrangement of the EMAs above the spot indicates that the pair continues to face resistance, while the 14-day Relative Strength Index hovering around 40 suggests persistent downside pressure without having entered oversold territory. On the topside, initial resistance is observed at the nine-EMA near 0.8049, followed by the 50-EMA at 0.8060. These levels collectively create a constrained overhead supply zone that bulls must reclaim to alleviate the prevailing bearish sentiment. In the absence of proximate structural supports within the data, any additional decline from current levels would compel the pair to search for new demand zones beneath 0.8000, thereby maintaining a downside risk profile as it operates below these moving averages.
