The USD/CHF currency pair edged lower to around 0.8845 during the early European session on Monday as market sentiment weighed on the US Dollar (USD). Concerns over former US President Donald Trump’s unpredictable trade policies, coupled with weak economic data, have pressured the greenback against the Swiss Franc (CHF). Investors now await the release of US February Retail Sales data later in the day.
Market optimism surrounding Trump’s economic agenda has given way to fears that his trade policies could trigger a recession. On Friday, data showed the US Consumer Sentiment Index fell to its lowest level in nearly two and a half years in March. Meanwhile, inflation expectations increased amid mounting worries over Trump’s sweeping tariffs, which have fueled global trade tensions.
Geopolitical uncertainty has further added to market jitters. US Defense Secretary Lloyd Austin reaffirmed on Sunday that the United States will continue targeting Yemen’s Houthi rebels until they halt attacks on shipping routes. In response, the Iran-aligned Houthis have threatened further escalation following US airstrikes.
The combination of intensifying trade disputes and escalating geopolitical risks has boosted demand for the safe-haven Swiss Franc, exerting downward pressure on the USD/CHF pair.
Meanwhile, the Federal Reserve (Fed) is widely expected to keep interest rates unchanged at its March meeting on Wednesday. Fed Chair Jerome Powell and other officials have signaled a cautious approach, given the uncertainty surrounding economic policies. Investors currently anticipate two quarter-point rate cuts beginning in June or July, with a strong possibility of a third cut by year-end. However, any unexpectedly hawkish comments from Fed policymakers could provide short-term support for the USD.
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