*) see also: InstaTrade trading indicators for USD/CHF

The USD/CHF pair is attempting a corrective rally and, ahead of Thursday's session, is testing the 0.7745–0.7755 area while remaining in a broader bear market. However, the move is unstable as the market balances dollar support against demand for defensive assets, including the Swiss franc. The main question for the coming days is whether the dollar can sustain its recovery or whether the franc will strengthen again on renewed geopolitical risk.

Geopolitics: US–Iran talks boost demand for franc

Investor focus is on a new round of US–Iran negotiations in Geneva. The dialogue is taking place amid a significant buildup of US military presence in the Middle East, White House warnings of serious consequences if diplomacy fails, Tehran's statements on seriousness and flexibility, and a desire to avoid escalation. While uncertainty endures, gold and the franc are supported as safe havens. If the talks fail, demand for the CHF could increase.

US trade policy: source of uncertainty

Another source of instability is the US tariff policy. The US Supreme Court recently curtailed the White House's use of emergency powers to impose global tariffs. In response, President Donald Trump announced a new 10% tariff with the potential to rise to 15%. Tariff increases to 15% and higher for certain countries are possible. Uncertainty over trade conditions heightens volatility and supports demand for defensive assets, including the Swiss franc.

Fed policy: easing expectations shift

The situation has not altered plans for the Fed to pause in March, which the CME FedWatch Tool currently prices at roughly 98% probability. Meanwhile, investors still expect Fed cuts this year, although their timing remains uncertain.

According to CME FedWatch, the probability of a rate cut in June has fallen to 40%; July is now seen as a more likely timing for the first cut (about 65%). Fed officials (Austan Goolsbee, Susan Collins, Thomas Barkin) have stressed the need for confirming macro data before adjusting policy.

*) see also yesterday's review "USD: short-term and long-term prospects ."

Key drivers over the coming days:

· weekly jobless claims (today at 13:30 GMT);

· producer price index (PPI) (Friday at 13:30 GMT).

If inflation prints higher than expected, the dollar will gain support. If data confirm a slowdown in price pressures, markets may more actively price in up to three cuts this year, which would increase pressure on the USD.

Switzerland: SNB policy and economic expectations

The February ZEW expectations index rose to 9.8 from negative territory in January, signaling improved business sentiment. That jump had only a modest impact on the Swiss franc, as investors remain focused on global risks and on waiting for decisions from the Swiss National Bank on monetary policy.

Earlier, the SNB president, Martin Schlegel, said the bank was prepared to tolerate short episodes of deflation calmly, underlining the regulator's focus on long-term inflation prospects and an expected pickup in the indicator in the coming months. Despite confidence in the resilience of growth, the central bank left open the possibility of intervening in foreign exchange markets if needed to stabilize the currency.

Upcoming Swiss GDP for Q4 (publication Friday at 07:00 GMT) could be an additional driver. Acceleration above 0.5% year-on-year would strengthen the franc.

Conclusion

USD/CHF is in a phase of heightened sensitivity to the news flow and is balancing between two forces: dollar support from persistent inflation and demand for the franc as a safe haven. The franc retains the potential to strengthen amid geopolitical risk, trade uncertainty, and safe-haven flows. At the same time, dollar resilience and potential US inflation surprises could temporarily support the pair.

The PPI and US labor market data will be key near-term guides for the market. Direction will also depend on the outcomes of US–Iran talks, US inflation statistics, and signals from the Fed and the SNB.

*) see also today's review, "USD/CHF: dynamic scenarios for 26.02.2026 ."