USD/CHF dips below 0.8800 as concerns over US growth intensify

• USD/CHF struggles as the US Dollar weakens amid growing concerns over a potential slowdown in the US economy.
• The Swiss Franc gains strength as trade tensions rise following China's new tariffs of 10-15% on US agricultural goods.
• The Swiss National Bank is expected to implement a rate cut in March, with the possibility of another in June.

The USD/CHF pair continues its decline for the third consecutive day and is trading around 0.8790 during Monday's Asian session. The US Dollar (USD) faces headwinds amid growing concerns about a potential slowdown in the US economy. However, further downside may be limited as US Treasury yields rise.

The US Dollar Index (DXY), which tracks the USD against six major currencies, has fallen for the fifth straight session and is hovering around 103.90. Meanwhile, 2- and 10-year yields on US Treasury bonds are standing at 3.98% and 4.28%, respectively, at the time of writing.

Safe-haven demand for the Swiss Franc (CHF) strengthens as trade tensions between the US and China escalate. In response to US President Donald Trump's latest tariff hike on Chinese imports, Beijing has imposed new tariffs of 10-15% on select US agricultural goods, effective Monday.

Further fueling trade tensions, China announced a 100% tariff on Canadian agricultural goods in retaliation for tariffs imposed by Canada in October, further intensifying the broader trade conflict shaped by Trump's tariff policies.

Additionally, US Commerce Secretary Howard Lutnick stated late Sunday that Trump's planned 25% tariffs on steel and aluminum imports--set to take effect Wednesday--are unlikely to be delayed, according to Bloomberg.

Switzerland's inflation rate eased to 0.3% in February, the lowest since April 2021, down from 0.4% in January. Meanwhile, the Swiss economy grew by 0.2% in Q4 2024, slowing from 0.4% in Q3 and marking its weakest expansion since Q2 2023. These trends have fueled speculation of further rate cuts by the Swiss National Bank (SNB), with markets expecting one in March and potentially another in June.