The USD/CHF pair is experiencing a downward trend, hovering around 0.8620 in early European trading hours on Tuesday. The weakening US Dollar is a result of the anticipated rate cuts by the Federal Reserve, putting pressure on the pair. Investors are closely watching Fed Chair Jerome Powell’s upcoming speech for clues on the future of US interest rates.
Market analysts predict three 25 basis points rate cuts at the remaining Fed meetings of 2024, based on a Reuters poll. The recent disappointing US employment report has fueled speculations of deeper rate cuts, leading to a decline in the USD Index (DXY) below the 102.00 support level. Minneapolis Fed President Neel Kashkari’s dovish comments further support the expectation of rate cuts in September.
While the USD weakens, geopolitical tensions in the Middle East are easing, potentially dragging the Swiss Franc lower and providing support to the pair. The acceptance of a bridging proposal by Israeli Prime Minister Benjamin Netanyahu aims to resolve differences in the region, diminishing the geopolitical risk premium.
Swiss Franc FAQs
- The Swiss Franc (CHF) is Switzerland’s official currency and one of the top ten most traded currencies globally.
- CHF is considered a safe-haven asset due to Switzerland’s stable economy and political neutrality.
- The Swiss National Bank (SNB) meets quarterly to decide on monetary policy, impacting CHF value.
- Macroeconomic data releases in Switzerland can affect CHF valuation, with a strong Eurozone correlation.
Overall, the USD/CHF pair’s movements are influenced by Fed rate cut expectations, geopolitical developments in the Middle East, and the stability of the Swiss economy. Investors should monitor upcoming economic data releases and central bank decisions to assess the impact on the pair’s performance in the financial markets.