Swiss Franc strengthens as US Dollar Sinks on renewed pressure against Fed Chair Powell
- USD/CHF extends its decline on Monday, trading below the 0.8000 psychological level.
- Political pressure on Fed Chair Jerome Powell intensifies after DOJ referral over alleged perjury.
- SNB sight deposits jump by CHF 11.2 billion, triggering speculation but likely due to routine liquidity shifts.
The Swiss Franc (CHF) is gaining ground against the US Dollar (USD) for the second day in a row. The USD/CHF pair slipped below the 0.8000 mark earlier on Monday as the Greenback, already weighed down by US President Donald Trump’s renewed trade threats, came under more pressure from growing political attacks on Federal Reserve (Fed) Chair Jerome Powell.
At the time of writing, the USD/CHF pair is trading around 0.7980 during American trading hours. Meanwhile, the US Dollar Index (DXY) is down over 0.70% on the day, hovering around 97.80
Concerns over the Fed’s independence have intensified after Rep. Anna Paulina Luna (R-Fla.) formally referred Chair Jerome Powell to the Department of Justice (DOJ) for criminal charges, accusing him of two specific instances of lying under oath during his congressional testimony about the Federal Reserve’s $2.5 billion headquarters renovation. While legal consequences remain uncertain, the political overhang is fueling investor jitters and adding a fresh layer of uncertainty to an already fragile market sentiment. The timing is particularly sensitive, as markets continue to grapple with mixed signals from Fed officials regarding a potential July interest rate cut and lingering doubts about the central bank’s ability to operate free from political interference.
Earlier in the day, speaking on CNBC, US Treasury Secretary Scott Bessent launched a sharp critique of the Fed, stating that it’s time to “examine the entire institution and whether they’ve been successful.” Bessent went further, pushing back against the Fed’s inflation warnings. “They’re fearmongering over tariffs,” he said, insisting inflation remains under control.
Meanwhile, Swiss fundamentals continue to support the Franc's strength. A Reuters report on July 21, 2025, indicated that commercial banks deposited CHF 11.2 billion more in overnight balances with the SNB last week, raising total sight deposits to their highest level since April 2024. While this has triggered speculation about potential FX intervention, analysts widely believe the increase stems from routine liquidity operations, such as maturing SNB bills and decreased repo activity, rather than the central bank actively buying or selling currencies in the market.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
Author
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
