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USD/CHF is rising towards 0.8845 in the early European session as markets prepare for the announcement of new tariffs by US President Donald Trump. The uncertainty surrounding these tariffs has raised concerns about a potential trade war.
Trump plans to impose reciprocal tariffs, which may lead to new barriers for countries currently levying duties on US goods. Market participants are also keeping an eye on the forthcoming US March ADP Employment Change data.
Us Manufacturing Index Decline
The Institute for Supply Management reported a decrease in the US Manufacturing Purchasing Managers Index (PMI) to 49.0 in March from 50.3 in February, falling below market expectations of 49.5. This decline could negatively impact the value of the US dollar.
Meanwhile, geopolitical tensions, particularly related to Iran, could drive safe-haven flows towards the Swiss Franc. The current dynamics suggest a supportive environment for CHF due to ongoing global trade anxieties.
The Swiss Franc’s value is influenced by various factors, including market sentiment, economic health, and actions by the Swiss National Bank. Aid from its status as a safe-haven currency further bolsters its resilience during times of market turmoil.
Decisions made by the Swiss National Bank are critical, as they determine monetary policy aimed at maintaining inflation below 2%. Economic data releases play an essential role in shaping the perception of the Swiss economy and influencing the CHF’s valuation.
Eurozone Dependence On Chf Performance
Switzerland’s economic dependence on the Eurozone also indicates that macroeconomic stability in the region is vital for CHF performance. Correlations indicate that movements in the Euro are likely to closely affect CHF value.
With the pair edging towards the 0.8845 level, we are witnessing delicate positioning as traders respond to rhetoric about tariffs, mainly due to the growing uncertainty tied to shifting US trade policy. The market appears to be pricing in the potential fallout from a rise in protectionist measures, and we are seeing returns gravitating towards safe-haven currencies, notably the Swiss Franc. The implications for directional setups remain tightly linked to geopolitical flare-ups and trade friction, both of which tend to prompt capital to flow out of the dollar and into currencies perceived as more stable.
The recent PMI print, sliding below the 50 mark again, confirms softening in the US manufacturing sector. That downward revision from February highlights a continued loss of momentum for factory output, even as broader economic data in the US has held up. Traders looking at the dollar through the lens of growth-sensitive data will be increasingly watching how these softer indicators weigh on the Fed outlook. While no immediate shift is expected, repeated sub-50 readings are not supportive for prolonged dollar strength, particularly in a risk-off tone.
Focus now turns towards announcements from the labour market, with ADP figures in sight. Employment trends remain relatively sturdy, but any shortfall—from either headline new hires or underlying wage pressure—will further intensify discussions around a potential shift in the monetary policy trajectory. That could result in a reduced appetite for rate hikes, which is something yield-sensitive pairs such as USD/CHF are highly reactive to. Delays or reappraisals of the hiking cycle tend to weaken the dollar across multiple crosses.
From our standpoint, flows into the Franc appear justified, given the broader macroeconomic signals and increased tension in the Middle East. Historical precedent confirms that any escalation involving Iran tends to lead to a shift in positioning, where traders lean on the Swiss Franc as a store of value. The reasoning is rarely just political—it’s also deeply connected to financial safety. This knee-jerk reaction isn’t new, but given the current news cycle, it might accelerate.
Monetary alignment from Bern already suggests an inflation-over-growth tilt in current decision-making. Policy reaction from the Swiss National Bank continues to prioritise low inflation over currency weakness. That said, the Franc’s resilience, even when broader European indicators disappoint, is still underpinned by its trusted safe-haven appeal. As long as that remains, interest rate speculation will only moderately distract from current flows, unless matched by tangible macro data changes.
It’s evident that moves in the Euro—driven by German data or ECB outlook changes—could spill over quickly into CHF valuation. Cross-asset reactions following small policy shifts in Frankfurt are surprisingly broad, especially considering regional alignment. For our part, that means keynote Eurozone data should not be isolated or viewed through a narrow lens. A miss in core European inflation or weak orders out of Germany can spill into CHF movement—particularly if the move amplifies yield differentials.
While technical price levels such as the 0.8845 area do present short-term resistance, any breach will likely hinge not just on charts but fundamental shifts on the dollar side. If headline risk continues to press, and we see even mild deterioration in US payrolls or a stalled consumer recovery, upside momentum in the pair will fade. In practice, that would embolden positions looking to fade rallies, with tighter stops around recent highs.
Near-term price behaviour should therefore be approached with awareness of where current volatility is sourced. Macro headlines are now less about central bankers and more about trade squabbles, industry disruption, and external shocks. Keeping a wider lens will allow us to assess risk more accurately and steer reacting short-term instruments with a sense of priority, rather than following every data point equally.
