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

USD/CHF has lost its recent gains from the previous day, trading around 0.8170 during Asian hours on Wednesday. The currency pair is experiencing downward pressure as the US Dollar (USD) weakens. This decline comes in the wake of the midterm elections on Tuesday, where Americans voted to determine control of Congress for the remaining two years of President Donald Trump’s term. With the Democrats securing a majority in the House of Representatives from the Republicans, markets are anticipating potential shifts in congressional leadership and fresh uncertainty regarding the future path of US fiscal policy. Live data from Decision Desk HQ shows results called in 253 of the 435 House seats, with Democrats holding 152 seats to the Republicans' 101 in the race to the 218 needed for a majority.

Beyond political developments, financial markets are closely monitoring geopolitical tensions and monetary policy signals. Traders are evaluating whether President Trump will resume military strikes against Iran, as diplomatic efforts remain stalled. Both Washington and Tehran are currently reviewing proposals from mediators following reported US airstrikes on Iran’s Qeshm Island. Although lower energy costs could temper expectations for aggressive monetary tightening, the CME FedWatch Tool indicates that markets are still pricing in a 79% probability of a Federal Reserve interest rate hike in December.

Compounding the pressure on the USD/CHF pair is the strength of the Swiss Franc (CHF), which has received domestic support following recent inflation data. Driven primarily by rising imported energy costs, Switzerland’s inflation climbed to a nearly three-year high of 1.5% in October. Even though this figure remains within the Swiss National Bank’s (SNB) 0% to 2% target range, the sudden acceleration has led market participants to price in an earlier rate hike, with expectations now pointing toward a move in early 2027.

USD/CHF slips as UOB questions sustainability of break below support

Strategists at UOB Group note that the recent volatility in USD/CHF has persisted, with the “USD subsequently dropped to a low of 0.8148 and then snapped back up to close at 0.8206 (+0.27%).” They add that the Dollar “fell further today and it could break below 0.8140. However, it is unclear whether it can maintain a foothold below this level,” underscoring lingering uncertainty around the pair’s ability to sustain a move beneath key support.