USD/CHF Gains Ground as Stronger USD Lifts Pair

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The USD/CHF pair strengthens around 0.9110 in early European trading on Monday, supported by expectations that the US Federal Reserve (Fed) will maintain interest rates this year following the January employment report. A key focus for markets will be Fed Chair Jerome Powell's testimony on Tuesday, followed by the US Consumer Price Index (CPI) inflation data on Wednesday.  

The US Dollar Index (DXY), which tracks the USD against six major currencies, is trading near 108.20, up 0.14% for the day. The US economy added 143,000 jobs in January, falling short of the expected 170,000, while the unemployment rate declined to 4.0% from 4.1% in December.  

Additionally, analysts suggest that tariff policies under the Trump administration could drive inflation higher, potentially pressuring the Fed to keep interest rates elevated. Markets now anticipate 36 basis points (bps) of rate cuts this year, down from the 42 bps forecast after a strong payroll report on Friday, further supporting the USD.  

Meanwhile, the Swiss Franc (CHF) may gain strength in the coming months as the Swiss National Bank (SNB) is unlikely to revert to negative interest rates, according to Commerzbank analyst Michael Pfister. The SNB could conclude its rate-cutting cycle at a 0.0% policy rate, down from the current 0.5%. Additionally, global economic uncertainty and geopolitical tensions in the Middle East may drive demand for safe-haven assets like the CHF.

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