Franc Soars as U.S. Buyback Pressures Dollar

Key Moments

Dollar Softens Against Franc on Expanded US Debt Buybacks

USD/CHF falls back after two consecutive days of advances, trading near 0.8000 in Asian hours on Monday as the US Dollar comes under renewed pressure. The move follows fresh fiscal signals from Washington that have unsettled currency markets.

The US Treasury Department surprised investors by committing to at least double its repurchases of longer-maturity government securities in an effort to rein in rising bond yields. Treasury Secretary Scott Bessent noted that these operations could surpass $4 billion, characterizing the initiative as a deliberate effort to indicate that current elevated yields do not adequately reflect the underlying strength of the economy.

Low Volatility Supports Carry Trades Despite Safe-Haven Flows

Analysts at ING view the intensified focus by US authorities on supporting the Treasury market as a constructive development for risk appetite. They argue it should be seen as a “risk-positive story,” adding that “volatility will stay low, and interest will remain firm in the carry trade.” In their assessment, such an environment continues to favor strategies that rely on steady funding conditions and contained market volatility.

At the same time, downside pressure on the Greenback may be tempered by an upswing in demand for safe-haven assets amid heightening geopolitical tensions in the Middle East. Sentiment deteriorated after Iranian Foreign Minister Abbas Araghchi characterized forthcoming US sanctions as an act of desperation, while Iranian Security Chief Mohsen Rezaei warned of “earthquake-like” retaliation if US President Donald Trump takes further steps. These remarks have reinforced a risk-off bias across global markets.

SNB Policy Outlook and Franc’s Role in Carry Trades

The Swiss National Bank has left its policy rate unchanged at 0% and is anticipated to maintain this level through 2027. The central bank has reiterated its willingness to step into foreign exchange markets when necessary to limit excessive appreciation of the Swiss Franc.

Most economists expect the SNB to begin raising rates in early 2028. However, current market pricing points to the possibility of a first hike as soon as March 2027. This divergence between economists’ projections and market expectations could enhance the Franc’s appeal as a funding currency for carry trades, as investors weigh the timing and trajectory of future SNB policy moves.

USD/CHF Technical Picture: Bearish Tone Persists

On the daily chart, USD/CHF is trading at 0.8000 and continues to exhibit a bearish near-term bias. The spot price remains below both the short- and medium-term Exponential Moving Averages, keeping the pair constrained as these EMAs sit overhead.

The configuration of the moving averages above the current price underscores the existing cap on rallies, while the 14-day Relative Strength Index near 40 signals persistent downward pressure without yet signaling oversold conditions.

On the upside, initial resistance is located at the nine-EMA around 0.8049, followed by the 50-EMA at 0.8060. Together, these levels form a compact resistance band that buyers would need to clear to alleviate the prevailing bearish setup. With no clearly defined nearby support levels cited in the data, a further drop from current prices would push the pair into untested demand zones below 0.8000, leaving risks tilted to the downside as long as USD/CHF trades beneath these moving averages.