USD/CHF Pulls Back Toward 0.8350 After US Credit Downgrade Sparks Dollar Weakness

USD/CHF Floats Around 0.8350, Pulls Back from Recent Highs as Market Stays Cautious

The USD/CHF currency pair is retreating from recent gains, trading around 0.8350 during the Asian session on Monday. The pullback comes amid renewed market caution following the downgrade of the US credit rating by Moody’s and ongoing uncertainty surrounding global trade dynamics.

Moody’s Investors Service downgraded the US sovereign credit rating by one notch, from Aaa to Aa1, citing rising federal debt levels and the increasing cost of servicing that debt. The agency warned that the US federal debt could surge to 134% of GDP by 2035, up from 98% in 2023. The downgrade has weighed on the US Dollar (USD) and triggered selling in US Treasury markets.

Adding to the pressure, US Treasury Secretary Scott Bessent stated that President Donald Trump is prepared to reimpose previously threatened tariffs on trading partners who do not negotiate in “good faith.” While this stance has revived concerns about global trade tensions, reports of a possible 90-day US-China trade ceasefire and expected trade agreements with other nations have offered some support to the Dollar.

On the Swiss side, the Swiss Franc (CHF) remains under pressure as expectations grow for additional monetary easing by the Swiss National Bank (SNB). Market participants believe the SNB may act further to support inflation and growth, which could limit CHF strength.

For now, the USD/CHF pair continues to trade in a narrow range, as traders await further signals from central banks and geopolitical developments to guide direction.