Swiss Franc gains momentum as US Dollar struggles following US midterms elections

The Swiss Franc (CHF) has been on the rise as the US Dollar (USD) faces challenges following the US midterms elections. On Wednesday, USD/CHF traded around 0.8170 during Asian hours, showing downward pressure due to a weakening US Dollar. This decline follows the midterm elections on Tuesday, where Democrats secured a majority in the House of Representatives, raising questions about future US fiscal policy.

Traders are closely monitoring geopolitical tensions and monetary policy signals, including the potential resumption of military strikes against Iran and the upcoming Federal Reserve interest rate decision in December. The CME FedWatch Tool suggests a 79% probability of a rate hike.

The strength of the CHF is supported by recent inflation data, which climbed to 1.5% in October, slightly above Switzerland's target range of 0% to 2%. This acceleration has led market participants to anticipate an earlier rate hike by the Swiss National Bank (SNB), with expectations now pointing toward a move in early 2027.

While the USD/CHF pair has faced volatility, with the Dollar dropping to a low of 0.8148 and then rising to close at 0.8206, it remains uncertain whether the pair can maintain a foothold below key support levels. The Swiss Franc, considered a safe-haven asset, tends to gain value during market stress due to Switzerland's stable economy and strong export sector.