UBS Switzerland is forecasting a decline in the USD/CHF currency pair to 0.78 by the end of the year, attributing the move largely to anticipated dollar weakness as the Federal Reserve moves in the direction of rate cuts and markets increasingly concentrate on economic fundamentals. The projection appears in a research note published Wednesday.
The Swiss bank left its end-June and end-September USD/CHF estimates unchanged at 0.79, while acknowledging a raised probability of short-term dollar strength before the projected slide takes hold. UBS strategists Constantin Bolz and Cl e9mence Dumoncel set out the medium-term outlook for the dollar as constrained by two principal forces: continued diversification away from US assets and the expectation of Fed easing.
UBS highlighted the confirmation of Kevin Warsh as the next Federal Reserve chair as a reinforcing factor for expectations of lower US policy rates. The strategists noted that this leadership change strengthens the case for downward pressure on US rates, which in turn would weigh on the dollar versus the franc.
On recent market behaviour, the bank pointed out that USD/CHF has retraced toward levels seen before the Iran-related market support faded in mid-March, as risk appetite returned. At the time the research note was written, the pair was trading around 0.79.
On the Swiss side, UBS expects inflation to edge up modestly to 0.7% year-on-year from the current 0.3%, a reading the bank says would remain within the Swiss National Bank s target range and would not, in their view, necessitate further SNB hikes or force renewed franc strengthening.
The SNB, the strategists added, reiterated at its March policy meeting that it does not want to see the franc appreciate further and reaffirmed its readiness to intervene in currency markets if needed.
In technical terms, UBS identifies first resistance for USD/CHF at 0.805-0.810 and support at 0.76. The bank warns that the pair could climb above 0.80 in a risk-off episode or with an escalation of geopolitical tensions, while longer-term structural headwinds for the dollar - including persistent twin deficits - could drive the exchange rate to 0.75 or below. UBS s March 2027 forecast for USD/CHF is 0.78.
Implications
- Currency markets may see renewed focus on central-bank trajectories as Fed expectations shift toward easing and the SNB signals intervention readiness.
- Risk-sensitive assets could respond to short-term dollar strength should near-term volatility rise, while longer-term dollar weakness would reshape cross-border investment flows.