USD/CHF: Here’s why the Swiss franc just pumped to 2011 highs

The USD/CHF exchange rate continued its strong downtrend this week, plunging to the lowest level since 2011. It has dropped in the last five consecutive months, the longest losing streak since September last year. This article explains the top reasons why the pair has crashed this month. 

US dollar index has crashed 

The USD/CHF exchange rate has plummeted due to the ongoing decline in the US dollar index. The index, which tracks the performance of the greenback against other currencies, dropped to a low of $97.30, its lowest point since March 2022. 

This crash has happened for several reasons. First, there are concerns about the Federal Reserve’s independence as Donald Trump continues to pressure Jerome Powell into cutting interest rates.

The initial concern was that Trump would fire Powell, a move that would not stand in the judicial system. With Powell’s term ending next year, Trump is considering a go-around approach. 

He is considering appointing a new Fed Chair in waiting. Some of the names he is considering are Kevin Warsh, Kevin Hassett, Scott Bessent, David Malpass, and Christopher Waller. 

Second, the US dollar index has plunged because geopolitical risks have eased in the past few days. The risks eased after Donald Trump brokered a deal between Iran and Israel that analysts hope will stick.

Furthermore, there are indications that the Federal Reserve will begin cutting interest rates later this year. Christopher Waller and Michele Bowman, two Fed officials, have said that they would support cuts as soon as in the next meeting. 

In a statement this week, Jerome Powell hinted that the bank would start cutting in September if inflation falls. Analysts at Morgan Stanley expect the bank to deliver at least seven cuts in 2026.

Swiss franc as a safe haven

The USD/CHF exchange rate has also plunged because the Swiss franc has emerged as a safe-haven currency, due to its strong economy, with a report showing that the economy expanded by 0.7% in the first quarter, the quickest growth rate in over two years. 

Most of this growth was driven by the strength of the services sector and surging gold exports. 

The Swiss franc also jumped as concerns about the US dollar pushed more investors to its safety. Switzerland is a neutral country with a solid political system. As such, concerns about the US have pushed more investors to its safety. 

The USD/CHF pair has also plunged as most currencies have jumped against the US dollar. For example, the euro has jumped to its highest point in three years, while the GBP/USD pair rose to its highest level since 2021.

USD/CHF technical analysis

The weekly chart shows that the USD/CHF exchange rate has been in a strong downtrend in the past few months. It crashed below the important support level at 0.8337, its lowest swing in January 2024, and the neckline of the triple-top point at 0.9205. 

The pair has crashed below the 50-day and 2, 00-day Exponential Moving Averages (EMA), which formed a death cross pattern in February 2023. 

Top oscillators, such as the Relative Strength Index (RSI) and the MACD, have all pointed downward. Therefore, the USD/CHF pair will continue falling as sellers target the next key support level at 0.7850.