• USD/CHF recorded a three-month low of 0.7861 on Wednesday.
• The US Dollar faces challenges amid growing odds for two Fed rate cuts in 2026.
• UBS analysts see Switzerland’s five-year growth outlook at its strongest level since late 2024.

USD/CHF loses ground for the third consecutive session, trading around 0.7880 during the Asian hours on Wednesday. The pair hit a three-month low of 0.7861 during early trading as the US Dollar (USD) faces challenges, which could be attributed to the growing expectations of two rate cuts by the Federal Reserve (Fed) in 2026. Volumes are expected to be thin due to holiday-shortened trading.

White House Adviser Kevin Hassett said on Tuesday that the Fed is not cutting interest rates quickly enough, even though the US economy grew at a much faster-than-expected pace in the third quarter, according to a CNBC report. Moreover, Fed Member of the Board of Governors Stephen Miran said on Monday that failing to ease policy would raise recession risks, adding that the need to dissent for 50 basis points diminishes over time as rates are reduced.

The US Bureau of Economic Analysis (BEA) reported on Tuesday that preliminary US Gross Domestic Product (GDP) Annualized expanded 4.3% in the July–September period. The reading exceeded market expectations of a 3.3% increase and the previous quarter’s 3.8% growth. The US core Personal Consumption Expenditures (PCE) Price Index rose by 2.9% quarter-over-quarter, matching analysts’ estimates.

The US Dollar may remain pressured as analysts caution that headline GDP strength overstates underlying health, with growth driven by healthcare spending and inventory drawdowns, alongside labor market softening and weaker US consumer confidence in December.

On Tuesday, the Swiss ZEW Survey – Expectations index fell to 6.2 in December from November’s ten-month high of 12.2, while the Current Conditions index surged to 16.6 from -4.9. Meanwhile, UBS analysts have grown more optimistic on Switzerland’s long-term outlook since September, with the five-year growth forecast climbing to its highest level since late 2024. The survey also points to continued Swiss Franc (CHF) strength.