Swiss Franc remains calm as US Dollar steadies on Fed outlook uncertainty

• USD/CHF moves little as the US Dollar moves sideways amid uncertainty surrounding the Fed outlook.
• The Fed paused rate hikes in October despite high inflation, though two officials dissented, favoring an immediate interest rate increase.
• Swiss ZEW Expectations plummeted to -15.3 in October, marking the sharpest monthly decline in economic sentiment since March 2026.

USD/CHF holds gains after paring daily gains, trading around 0.8280 during Asian hours on Thursday. The US Dollar (USD) lost recent gains after the Federal Reserve (Fed) kept interest rates unchanged as widely expected, while providing limited clarity on its next policy move.

The Fed held rates steady at 3.75%–4.00% and noted that economic activity continues to expand. In its official statement, the central bank highlighted resilient domestic spending, robust capital investment, and strong productivity growth. Regarding its labor market mandate, the Fed observed that job gains have kept pace with workforce growth while the unemployment rate has shown little change.

On inflation, the Fed acknowledged that price pressures remain elevated, but it chose to pause further rate hikes to gather additional data and assess the appropriate monetary policy stance going forward. The decision was not unanimous: Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented, voting instead in favor of an immediate rate increase.

Fed Chair Kevin Warsh reaffirmed the Federal Open Market Committee's commitment to delivering price stability and achieving its 2% inflation target, emphasizing that the underlying economy remains strong. He also outlined the central bank's upcoming schedule, noting that the Fed will hold eight meetings next year—including one without a formal vote—and that he anticipates six policy-setting meetings in 2028.

On Wednesday, Switzerland’s ZEW Survey – Expectations index dropped sharply to -15.3 in October, down from +2.6 in September. This decline represents the sharpest monthly drop in sentiment since March 2026, when confidence was heavily impacted by Middle East tensions.

USD/CHF upside momentum builds but UOB stays cautious on break above resistance

Strategists at UOB Group note that their 1–3 week view on USD/CHF has shifted as price action has evolved over recent sessions. They recall that “two days ago (26 Oct, spot at 0.8250), we indicated that USD ‘has likely entered a range-trading phase between 0.8200 and 0.8290.’” However, after the Dollar pushed up to 0.8278, UOB highlighted on 27 October, with spot at 0.8270, that “upward momentum is starting to build, and if USD closes above 0.8290, it could rise to 0.8320.” At the same time, they cautioned that “to sustain the momentum buildup, USD must not break below 0.8230 (‘strong support’ level).”

Following this guidance, USD/CHF subsequently “rose and closed at 0.8290.” UOB concedes that “while we would have preferred a more decisive close above 0.8290, the price action suggests USD could test 0.8320.” Even so, they judge that “at this stage, the odds of a continued rise above this level are not high for now,” and revise their technical levels accordingly, with “the ‘strong support’ level now at 0.8250 instead of 0.8230.”