USD/CHF Hits Lowest Since 2011 as Fed Independence Concerns Weigh on Dollar

USD/CHF Nears Lowest Level Since 2011 as US Dollar Weakness Deepens

The USD/CHF currency pair tumbled to a multi-year low of 0.8025 during early Asian trading on Thursday, marking its weakest level since September 2011. This significant drop reflects sustained US Dollar (USD) pressure, driven by concerns over Federal Reserve (Fed) independence and expectations of aggressive rate cuts.

Fed Autonomy and Rate Cut Bets Weigh Heavily on USD

The decline in USD/CHF stems primarily from mounting worries about the Fed’s autonomy, after US President Donald Trump stepped up his criticism of Fed Chair Jerome Powell, labeling him “terrible” for not slashing interest rates sooner. Trump also indicated that Powell’s job is at risk, as he weighs several candidates for a replacement—raising questions over the future credibility and independence of the Fed.

Markets are now pricing in a 50-basis-point rate cut by the end of 2025, with roughly a 25% probability of a rate reduction as early as July, according to CME’s FedWatch tool. These dovish bets continue to push the US Dollar to over three-year lows.

Swiss National Bank’s Stance Limits CHF Gains

While the Swiss Franc (CHF) is traditionally a safe-haven asset, the Swiss National Bank (SNB) recently signaled it may hold off on further rate cuts, disappointing traders who expected deeper negative rates. This neutral stance is partially capping the upside momentum for CHF despite the weak USD.

Middle East Ceasefire Supports Global Risk Sentiment

The Israel-Iran ceasefire has helped improve global risk appetite and slightly reduced the demand for safe-haven currencies like the CHF. This geopolitical development is cushioning the downside in the USD/CHF pair and preventing a steeper decline for now.

What to Watch: Key US Economic Data Ahead

Traders are now eyeing a series of important US macroeconomic releases scheduled for Thursday:

• Q1 GDP (Final)
• Weekly Initial Jobless Claims
• Durable Goods Orders
• Pending Home Sales

These data points could offer new clues on the health of the US economy and guide the Fed’s next policy move, potentially providing some directional bias for USD/CHF.

Conclusion

The USD/CHF remains under heavy selling pressure amid fears of political interference in Fed policy and dovish interest rate expectations. With the pair hitting lows not seen since 2011, traders will be closely monitoring upcoming economic data and developments on the US political front for potential trend shifts.

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