CFD Trading Rate US Dollar vs Swiss Franc (USDCHF)

• USD/CHF trims daily losses on expectations of de-escalating the Israel-Iran situation.
• An Iranian official stated there is currently no immediate plan for retaliation against the Israeli airstrikes.
• The US Dollar may gain ground on higher US Treasury yields as Fed officials conveyed hawkish messages on Thursday.

USD/CHF trades around 0.9080 during the European hours on Friday. The pair trims intraday losses after the statement made by an Iranian official that there is no immediate plan of retaliation against Israeli airstrikes.

The safe-haven Swiss Franc (CHF) strengthened as risk aversion spread across financial markets, triggered by reports from ABC News confirming Israeli missile strikes on a site in Iran on Friday, which heightened tensions in the Middle East. Additionally, Reuters cited Iran’s Fars News Agency reporting that locals heard explosions at the central Isfahan airport.

In the near term, the Swiss Franc is anticipated to encounter downward pressure as the Swiss National Bank (SNB) is projected to further decrease interest rates. With price pressures in the Swiss economy persisting below the targeted rate of 2%, SNB might implement another rate cut during its upcoming June meeting.

The US Dollar Index (DXY), which gauges the US Dollar (USD) against six major currencies, edges lower to near 106.10. Nevertheless, hawkish comments from Federal Reserve (Fed) officials on Thursday prompted a rise in US Treasury yields. At present, 2-year and 10-year yields on US Treasury bonds are at 4.96% and 4.58%, respectively. The higher yields may attract support for the Greenback, thus underpinning the USD/CHF.

Atlanta Fed President Raphael Bostic emphasized that US inflation is unreasonably high and stressed the need for the Fed to continue making strides in addressing inflation. Additionally, New York Fed President John Williams underscored the Fed's dedication to being guided by data and indicated that he does not currently see an urgent necessity to decrease interest rates.

• USD/CHF drops below 0.9100, dragged by a correction in the US Dollar.
• The US Dollar drops as traders reprice the interest rate outlook of other central banks.
• The SNB could cut interest rates further amid easing price pressures.

The USD/CHF pair falls below the round-level support of 0.9100 in Thursday’s European session. The Swiss Franc asset comes under pressure as the US Dollar drops amid cheerful market mood.

The US Dollar faces selling pressure after refreshing a five-month high. The US Dollar Index (DXY) drops to 105.85 as investors reassess speculation about rate cuts by other central banks from developed nations. Federal Reserve (Fed) Chair Jerome Powell supported keeping interest rates higher for an extended period, with inflation remaining stubbornly higher in the first three months of this year, but policymakers from other central banks also turned cautious about premature rate cuts.

This forced traders to price out early rate-cut bets by central banks, such as the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ).

Meanwhile, the appeal for risk-perceived assets remains strong. S&P 500 futures have posted significant gains in the London session. 10-year US Treasury yields correct further to 4.57%.

The US Dollar could regain bullish traction, knowing that the United States economy remains resilient due to strong economic growth, tight labor conditions and robust households’ spending. While other economies remain exposed to a technical recession.

On the Swiss Franc front, investors could capitalize the corrective move to build fresh longs. In the near-term, the Swiss Franc is expected to face more downside as the Swiss National Bank (SNB) is expected to reduce interest rates further. Price pressures in the Swiss economy remain below the desired rate of 2%, offering relief to SNB policymakers to lower borrowing rates further.

• USD/CHF is trending higher within a rising channel. 
• The trend is expected to continue to the next set of targets. 
• A break below the lower channel line would be required to signal a reversal. 

USD/CHF is rallying in an ascending channel on the daily chart. It is in a short and medium-term uptrend which is expected to continue higher given the old adage that the “trend is your friend.” 

USD/CHF Daily Chart

USD/CHF has been consolidating over the past few days in the lower 0.9100s but it will probably eventually break higher in accordance with the dominant uptrend. A break above the 0.9152 April highs would confirm more upside. 

The next target to the upside comes in at around 0.9173 where some major moving averages converge on higher time-frame charts. 

Following that, the next upside target would be located at 0.9240 the level of previous major swing highs made in October 2023.

The Relative Strength Index (RSI) is not overbought any longer, suggesting scope for further upside. 

A decisive break below the lower boundary of the channel, currently at roughly 0.9020, would reverse the outlook and bring into question the direction of the intermediate trend. 

A decisive break would be one characterized by a breach with a longer-than-average red candlestick or three consecutive red candlesticks. 

• USD/CHF edges lower to 0.9105 amid the softer USD on Wednesday. 
• The uncertainties and escalating tensions in the Middle East might benefit the Swiss Franc (CHF). 
• Fed’s Powell stated that monetary policy needs to be restrictive for longer, triggering the hope of delaying interest rate cuts. 

The USD/CHF pair faces some selling pressure to 0.9105 on Wednesday during the early European session. The downtick of the pair is supported by the decline of the US Dollar Index (DXY) to 106.20. Additionally, the ongoing geopolitical tensions in the Middle East continue to support the Swiss Franc (CHF), a traditional safe-haven currency. 

Late Tuesday, National Security Advisor Jake Sullivan said that new sanctions targeting Iran and sanctions against entities supporting the Islamic Revolutionary Guard Corps and Iran's Defense Ministry will be imposed in the coming days. Sullivan added that these new measures will "continue a steady drumbeat of pressure" to contain and degrade Iran's military capacity and effectiveness and confront the full range of its problematic behaviors. Meanwhile, western leaders have urged Israel to exercise restraint against escalation. Market players will closely monitor the development surrounding Israel and Iran tensions. Any escalating tensions might boost safe-haven assets like CHF and create a headwind for the USD/CHF pair. 

On the other hand, strong US economic data and hawkish comments from the US central bank remain to support the Greenback for the time being. The Federal Reserve's Jerome Powell stated that the US economy has not seen inflation come back to the 2% target and that monetary policy needs to be restrictive for longer. These remarks further dampen investors' hopes for meaningful rate cuts this year and lift the USD against its rivals. According to the CME FedWatch Tool, financial markets have priced in 67% odds that the Fed will cut interest rates in September. 

• USD/CHF climbs 0.12% amid global risk aversion, boosting demand for the US Dollar.
• Breaking past the November 1, 2023, high of 0.9112 suggests potential for more gains, targeting the 0.9200 resistance.
• A fallback below 0.9100 could prompt a test of the major support trendline around 0.9040.

The US Dollar posts minimal gains versus the Swiss Franc in the mid-North American session and gains 0.12%, trading at 0.9127 at the time of writing. Risk aversion, higher US Treasury yields, and solid US Retail Sales data boost the Greenback.

USD/CHF Price Analysis: Technical outlook

The pair remains upward biased after cracking the last cycle high of 0.9112 on November 1, 2023, which could pave the way for further upside. The USD/CHF peaked at around 0.9151, which, once surpassed, will expose the 0.9200 mark. A breach of the latter, and the pair could rally towards October 3, 2023, a high of 0.9245, with the next key resistance level seen at 0.9300.

On the other hand, if USD/CHF drops below 0.9100, that could open the door to challenge a three-and-a-half-month-old support trendline that passes around 0.9040. A further downside is seen at 0.9000.

USD/CHF Price Action – Daily Chart

• USD/CHF hovers below 0.9152, the highest since October reached on Monday.
• US Dollar strengthened as higher Retail Sales amplified expectations of the Fed prolonging higher policy rates.
• Swiss Franc faces challenges due to the likelihood of SNB implementing another rate cut in the June meeting.

USD/CHF recovers its recent losses registered in the previous session, trading near 0.9120 during the early European hours on Tuesday. The strength of the US Dollar (USD) provides support to bolster the USD/CHF pair. This strength is fueled by better-than-expected Retail Sales figures from the United States (US), which have increased expectations that the Federal Reserve (Fed) might maintain higher interest rates for an extended period.

Moreover, the US Dollar Index (DXY) extends its gains to near 106.30, while the yields on US Treasury bonds for both the 2-year and 10-year stand at 4.93% and 4.62%, respectively, at the time of writing. Escalating geopolitical tensions in the Middle East prompted investors to seek refuge in the safe-haven US Dollar (USD).

Federal Reserve (Fed) Bank of San Francisco President Mary Daly stated on Monday that while there has been notable progress on inflation, there is still further ground to cover. She emphasized the importance of being confident that inflation is on a path toward the target before taking action.

On the other side, in March, Swiss Producer and Import Prices (MoM) exhibited steady growth, increasing by 0.1%. However, Producer and Import Prices (YoY) experienced a more pronounced contraction, declining at a rate of 2.1% compared to the previous contraction of 2.0%.

The Swiss Franc (CHF) had already undergone a significant depreciation following the Swiss National Bank's (SNB) unexpected rate cut in March. With inflation showing moderation in March and business confidence remaining pessimistic, market speculation suggests that the SNB might implement another rate cut during its upcoming June meeting.

• USD/CHF gathers strength to break above 0.9150 as geopolitical tensions improve safe-haven demand.
• US bond yields soar as the Fed is expected to maintain a restrictive monetary policy for a longer period.
• Easing Swiss producer inflation boosts expectations of more rate cuts by the SNB.

The USD/CHF pair hovers near six-month high around 0.9150 in Monday’s European session. The Swiss Franc asset is expected to extend upside as the US Dollar strengthens due to potential risks of further escalation in Middle East tensions and receded hopes of Federal Reserve (Fed) lowering interest rates from the June meeting.

S&P 500 futures have posted significant gains in the European session, portraying some improvement in investors’ risk appetite. Though risky assets could retreat amid fears that Israel could retaliate to airstrike by Iran in which hundreds of drones and missiles were launched.

10-year US Treasury yields soar to 4.55% as the Federal Reserve (Fed) has no urgency to reduce interest rates with inflation remaining persistently higher. The speculation for the Fed reducing interest rates in the June and July meetings has faded and investors are now anticipating rate cuts in the September meeting.

The US Dollar Index (DXY) turns sideways after refreshing five-month high near 106.00. In today’s session, investors will focus on the monthly Retail Sales data for March, which will be published at 12:30 GMT. The Retail Sales data is estimated to have grown at a slower pace of 0.3% against the prior reading of 0.6%. A slowdown in Retail Sales would release some heat from the stubborn inflation outlook.

Meanwhile, the Swiss Franc remains on the backfoot as the Swiss National Bank (SNB) is expected to cut interest rates again in the June meeting, keeping in mind that inflation has come down sustainably below 2%.

The confidence in price pressures slowing further has deepened after the Swiss Producer and Import Prices grew moderately in March. Monthly producer inflation grew steadily by 0.1%. Annually, Producer and Import prices contracted at a higher pace of 2.1% from the former reading of 2.0%.

• USD/CHF declines, breaking below key support amid shifting market conditions.
• Despite downturn, upward trend holds; resistance at 0.9100, 0.9147 if recovery occurs.
• Continued falls could test supports at 0.9023 and key 0.9000 level.

The USD/CHF retreats from year-to-date (YTD) highs reached on Wednesday and drops below the 0.9100 figure as risk appetite improves. The major trades were down by 0.9099 by 0.32%.

USD/CHF Price Analysis: Technical outlook

From a technical perspective, the daily chart depicts the pair as upward biased. After bottoming around the 0.8300 figure, successive series of higher highs and higher lows, alongside the breach of key resistance levels like the 50, 100, and 200-day moving averages (DMAs), opened the door for further upside.

However, after peaking at around 0.9147, the USD/CHF dipped below the April 3 high turned support at 0.9095, but unless the pair closes below the latter, the rally remains alive. The first resistance would be the 0.9100 mark, followed by the year-to-date (YTD) high of 0.9147. Once cleared, the next stop would be the 0.9200 mark, closely followed by the October 3 high of 0.9245.

In the scenario of sellers pushing spot prices below 0.9095, that could pave the way for testing the April 10 swing low of 0.9023, followed by 0.9000.

USD/CHF Price Action – Daily Chart

• USD/CHF drops sharply to 0.9000 as US Dollar slumps ahead of US Inflation data.
• S&P 500 opens on a positive note, indicating demand for risk-perceived assets.
• The SNB is expected to cut interest rates again as Swiss inflation remains below 2%.

The USD/CHF pair falls sharply to 0.9010 in Tuesday’s early New York session. The Swiss Franc asset weakens as the market sentiment remains cheerful even though traders pare bets supporting Federal Reserve (Fed) rate cuts from the June meeting. Market expectations for the Fed reducing rates ease as strong United States Nonfarm Payrolls (NFP) data strengthens the inflation outlook.

The S&P 500 opens on a positive note, exhibiting decent demand for risky assets. 10-year US Treasury yields drop to 4.37% on fears that risks to employment and inflation could be imbalanced if interest rates remain higher for a long period.

On Monday, Chicago Federal Reserve President Austan Goolsbee said the central bank must consider for how long interest rates will remain higher on Monday. Goolsbee warned that the Unemployment Rate could rise if interest rates remain high for too long.

The US Dollar Index (DXY) falls to 103.90 amid cheerful market sentiment. Going forward, investors will focus on the US consumer price inflation data for March, which will be published on Wednesday.

Monthly headline and core inflation are both forecasted to have increased at a slower pace of 0.3% from 0.4% in February. In the same period, economists expect the annual headline CPI to accelerate to 3.4% from 3.2%, while the core inflation is anticipated to decelerate to 3.7% from 3.8%. The inflation data is expected to significantly influence market expectations for Fed rate cuts.

On the Swiss Franc front, investors expect that the Swiss National Bank will cut interest rates again as inflation remains consistently below 2%. The SNB led the global rate-cut cycle as it surprisingly announced a dovish interest rate decision in the March meeting. The central bank lowered its borrowing costs by 25 basis points (bps) to 1.5%.

• USD/CHF trades softer near 0.9050 in Tuesday’s early European session. 
• Fed’s Kashkari said if inflation continues to stall, no rate cuts would be a possible scenario.
• The rising Middle East geopolitical tensions might boost safe-haven flows, benefiting the CHF.  

The USD/CHF pair trades on a weaker note around 0.9050 during the early European session on Tuesday. The downtick of the pair is backed by the weaker US Dollar (USD). Nonetheless, the upbeat US March employment report and the hawkish comments from the Federal Reserve (Fed) officials might cap the downside of the USD/CHF pair. 

The US employment report for March showed that the economy added more jobs than expected, prompting speculation that the Fed might delay the easing cycle. The odds of a June rate cut declined to below 50% from a week earlier around 57%, according to the CME’s FedWatch tool. 

The Fed Chair Jerome Powell stated that the central bank could cut rates if the US economy continued on its current course. Meanwhile, Fed Governor Michelle Bowman said last week that the Fed might need to act further to ease price pressures. Minneapolis Fed President Neel Kashkari noted that he penciled in two interest rate cuts this year but if inflation continues to stall, no rate cuts would be a possible scenario. Investors will take more cues from the US Consumer Price Index (CPI) data for March, due on Wednesday. The firmer-than-expected reading could lower expectations for Fed rate cuts in June and lift the US Dollar (USD), while softer reading could spur speculation about rate cuts. 

On the Swiss front, the likelihood of an immediate ceasefire between Israel and Hamas remained gloomy, as the two sides had failed to reach an agreement despite repeated attempts by the US and its allies to help negotiate peace. Additionally, the top Iranian military advisor warned that none of the Israeli diplomatic missions are safe anymore after this week’s attack on the Iranian Consulate in Syria, per, Anadolu Agency reports. The escalating tensions surrounding geopolitical tensions in the Middle East could boost safe-haven assets like the Swiss Franc (CHF) and create a headwind for the USD/CHF pair. 

• USD/CHF edges higher as US Dollar improves on reduced chances of a Fed rate cut in June.
• The de-escalated tension in the Middle East could weaken the demand for safe-haven CHF.
• Higher US Treasury yields are contributing support for the Greenback.

USD/CHF gains ground for the second consecutive session on Monday, advancing to near 0.9050 during the European trading hours. Israel's decision to withdraw additional troops from Southern Gaza, possibly due to growing international pressure, has contributed to easing tensions. Additionally, peace talks between Israel and Hamas have resumed in Egypt, reducing concerns that may weaken demand for the safe-haven Swiss Franc (CHF).

In other news, the Swiss Unemployment Rate, not seasonally adjusted, increased by 2.3% month-on-month in March, slightly higher than the previous rise of 2.2%. The unemployment rate stood at 2.4% in March 2024, unchanged from the previous month on a non-seasonally adjusted basis.

At the time of writing, the US Dollar Index (DXY) trades higher around 104.30, propelled by a surprising beat in the Nonfarm Payrolls (NFP) report. The strong labor market performance in March, exceeding expectations, has reinforced bullish sentiment for the US Dollar.

The NFP reported a significant increase of 303,000 jobs in March, surpassing expectations of 200,000. However, the previous growth of 275,000 was revised downward to 270,000. Additionally, US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. On an annual basis, there was an increase of 4.1%, aligning with the market consensus but slightly lower than the prior reading of 4.3%.

According to the CME FedWatch Tool, the probability of a rate cut has decreased to 46.1%. Traders are now eagerly awaiting the release of US Consumer Price Index data for March, scheduled for Wednesday.

• USD/CHF recovers its recent losses amid improved US Dollar.
• The escalated tension in the Middle East provided support for the safe-haven Swiss Franc.
• US Initial Jobless Claims came in at 221K against the market expectations of a 214K figure.

USD/CHF advances to near 0.9030 during the early European hours on Friday, which could be attributed to the recovery of the US Dollar (USD). The resurgence in the long-term yield on 10-year US bond coupons has bolstered the Greenback, thereby providing support for the USD/CHF pair.

On Thursday, the safe-haven Swiss Franc (CHF) gained strength as market caution heightened due to the escalated geopolitical tensions in the Middle East. This tension stems from Iran's vow to retaliate against Israel's attack on Iran's embassy in Syria, which resulted in the loss of Iranian military personnel.

The Swiss Consumer Price Index (CPI) for March indicated a month-over-month reading of 0.0%, falling short of expectations of 0.3% and the previous month's figure of 0.6%. On a year-over-year basis, the CPI increased by 1.0%, lower than the anticipated 1.3% and the previous reading of 1.2%. The softer-than-expected CPI data for March has raised expectations of another interest rate cut by the Swiss National Bank (SNB).

The US Dollar (USD) encountered downward pressure on Thursday due to weaker employment data from the United States (US), which supported the EUR/USD pair. However, neutral comments from several Federal Reserve officials helped alleviate the downward trend of the US Dollar.

Federal Reserve (Fed) Bank of Richmond President Thomas Barkin noted that disinflation is expected to persist, though the pace of this trend remains uncertain. Meanwhile, Loretta Mester, President of the Federal Reserve Bank of Cleveland, expressed openness to reducing the pace of securities runoff from the Fed’s balance sheet soon. Additionally, she anticipated being in a position to lower the fed funds rate later this year.

• USD/CHF climbs to 0.9070 after the release of the softer-than-expected Swiss CPI report.
• Swiss soft inflation data has boosted expectations of more rate cuts by the SNB.
• The US Dollar exhibits weakness ahead of the US NFP report.

The USD/CHF pair rallies to 0.9070 in the European session on Thursday. The Swiss Franc asset strengthens as softer-than-expected Switzerland Consumer Price Index (CPI) data for March has boosted expectations of one more interest rate cut by the Swiss National Bank (SNB).

Among developed economies, the SNB has led the rate-cut cycle after reducing interest rates by 25 basis points (bps) to 1.5% in the monetary policy meeting on March 21.

Federal Statistical Office of Switzerland has reported that the monthly consumer price inflation remains stagnant while investors anticipated an increase of 0.3%. In February, price pressures rose by 0.6%. Annually, inflationary pressures surprisingly grew at a slower pace of 1.0%. Economists expected the consumer price inflation to grow at a higher pace of 1.3% after rising 1.2% in February.

Meanwhile, the US Dollar has extended its downside as weak United States Services PMI for March has dented the economic outlook. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, falls to 104.12.

The Institute of Supply Management (ISM) reported that the Services PMI fell to 51.4 from expectations of 52.7 and the former reading of 52.6. Also, subindexes such as New Orders and Prices Paid eased significantly.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for March, which will be published on Friday. US employers are anticipated to have recruited 200K workers, lower than the former reading of 275K.

• USD/CHF faces selling pressure near 0.9100 as US Dollar drops on weak ISM Services PMI data.
• Fed’s hawkish guidance has dented Fed rate cut expectations for June.
• Swiss weak Retail Sales boost speculation for more rate cuts by the SNB.

The USD/CHF pair faces a sharp sell-off near the round-level resistance of 0.9100 as the United States Institute of Supply Management (ISM) has reported weak Services PMI data for March. The Services PMI, which represents the service sector that accounts for two-thirds of the US economy, falls to 51.4 from expectations of 52.7 and the prior reading of 52.6.

The US Dollar has faced significant selling pressure after weak US Services PMI data. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drop to 104.40. The market sentiment improves as the S&P 500 has added significant gains after a subdued opening

Meanwhile, market expectations for the Federal Reserve (Fed) reducing interest rates from the June meeting have eased significantly. The CME FedWatch tool shows that traders are pricing in a 54% chance that the Fed will trim interest rates in June, down from 70% a week ago. 10-year US Treasury yields rise to 4.39%.

Market prospects for the Fed pivoting to rate cuts have eased due to hawkish guidance from Fed policymakers. Atlanta Fed Bank President Raphael Bostic told CNBC that he sees the central bank reducing interest rates only once this year as the economy is maintaining strong momentum.

This week, investors will keenly focus on the US Nonfarm Payrolls (NFP) data for March, which will be published on Friday.

On the Swiss Franc front, weak Real Retail Sales have boosted expectations of more rate cuts by the Swiss National Bank (SNB). The Retail Sales data, which represents consumer spending, surprisingly dropped by 0.2% while investors projected a growth of 0.4%. Deepening cost-of-living crisis would force SNB policymakers to consider more quantitative easing decisions.

• USD/CHF stands tall near its highest level since November 11 touched on Tuesday.
• A softer risk tone underpins the safe-haven CHF and caps gains amid a weaker USD.
• Reduced Fed rate cut bets should limit the USD downfall and favour USD/CHF bulls.

The USD/CHF pair enters a bullish consolidation phase during the Asian session on Wednesday and oscillates in a narrow band near its highest level since November 11 touched the previous day. Spot prices currently trade around the 0.9080 region and seem poised to prolong the recent positive momentum witnessed over the past month or so.

The Swiss Franc (CHF) continues to be undermined by the Swiss National Bank's (SNB) unexpected move to cut interest rates in March amid a faster-than-anticipated slowdown in inflation and economic growth. In contrast, the markets have been scaling back their expectations for rate cuts by the Federal Reserve (Fed) amid signs of a still-resilient US economy. This, in turn, favours the US Dollar (USD) bulls and validates the positive outlook for the USD/CHF pair.

Data released this week showed that the US manufacturing sector expanded in March for the first time since September 2022 and that demand for labor remains elevated. Adding to this, comments by a slew of influential FOMC members raised doubts over whether the Fed will cut interest rates three times this year. In fact, the current market pricing points to a total of 65 basis points (bps) rate cut for 2024, lower than the 75 bps projected by the US central bank in March.

The shift in outlook, meanwhile, remains supportive of elevated US Treasury bond yields and should help limit the ongoing USD corrective decline from its highest level since February 14. That said, the risk-off impulse, which tends to underpin demand for traditional safe-haven assets, could lend some support to the CHF and act as a headwind for the USD/CHF pair. Traders now look to the US macro data and speeches by influential FOMC members for a fresh impetus.

• USD/CHF appreciated as the US Dollar improved after stronger US ISM data.
• Swiss Franc receives downward pressure after weaker Real Retail Sales.
• Swiss Real Retail Sales declined by 0.2% YoY in February, against the expected rise of 0.4%.

USD/CHF extends gains for the second consecutive day, advancing to near 0.9080 during the early European hours on Tuesday. The US Dollar (USD) received a boost as US Treasury bond yields surged following positive ISM Manufacturing PMI data from the United States (US), thereby supporting the USD/CHF pair.

The US Dollar Index (DXY) continues its winning streak for the fifth successive session, trading around 105.10 at the time of writing. This positive trend is attributed to traders lowering their expectations for a quarter-point interest rate cut by the Federal Reserve in its June meeting.

However, Federal Reserve Chairman Jerome Powell indicated on Friday that recent US inflation data aligns with the anticipated path, reinforcing the Fed's stance on interest rate adjustments for the year.

On the other side, Real Retail Sales (YoY) from Switzerland declined by 0.2% in February, against the expected increase of 0.4% and the previous increase of 0.3%. This lower figure has contributed to downward pressure on Swiss Franc (CHF).

The Swiss National Bank’s (SNB) statement highlighted that the easing of monetary policy was feasible due to the effectiveness of the inflation-fighting efforts over the past two and a half years.

Moreover, ING analysts anticipate two additional rate cuts from the SNB in the year 2024, barring any unexpected developments in the global economic landscape that could rapidly escalate inflationary pressures once more.

• USD/CHF consolidates in a narrow trading range near 0.9015 on the softer USD on Monday.  
• The US Core PCE figures, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation.
• ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise that causes inflation to grow rapidly again.

The USD/CHF pair trades with mild negative bias around 0.9015 during the early European session on Monday. The dovish comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday weigh on the US Dollar (USD) and cap the upside of the USD/CHF pair. The attention is shifted to the US March ISM Manufacturing Purchasing Managers Index (PMI), due later on Monday. The market is likely to stay subdued amid the Easter Monday bank holiday in Switzerland, 

The recent inflation data was in line with market expectations in February, potentially keeping the Fed on hold before it can begin cutting interest rates this year. Market pricing is in line with Fed projections for three rate cuts, according to the CME Group’s FedWatch Tool. On Friday, the US Bureau of Economic Analysis reported that the Personal Consumption Expenditures Price Index (PCE) rose 2.5% YoY in February, in line with the market consensus. Meanwhile, the monthly PCE figure increased by 0.4% MoM in the same month, softer than expected. The Fed’s preferred inflation measure, Core PCE, rose 2.8% YoY and 0.3% MoM in February, matching the market estimation. 

On the Swiss front, the Swiss National Bank (SNB) decided to cut the benchmark interest rate by 25 basis points (bps) to 1.5% on March 21. The SNB statement noted that the easing of monetary policy has been made possible because the battle against inflation over the past two and a half years has been effective. ING analysts expect two more rate cuts this year from the SNB, unless there is a surprise in the international economic environment that causes inflationary pressures to grow rapidly again.

The Swiss Consumer Price Index will be due on Thursday, which is expected to show an increase of 1.4% in March. If the Swiss CPI inflation data came in softer than expected, this could exert some selling pressure on the Swiss Franc (CHF). On Friday, investors will turn their attention to the US employment data, including the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings for March. 

• USD/CHF holds the positive ground around 0.9025 on the firmer US Dollar. 
• The high-for-longer US rate narrative might boost the Greenback against the CHF. 
• SNB’s Schlegel said the SNB will monitor the FX rate closely and intervene if necessary. 

The USD/CHF pair snaps the two-day losing streak near 0.9025 on Friday during the Asian session. The hawkish comments from the US Federal Reserve (Fed) and strong US economic data boost the US Dollar (USD) and support USD/CHF. However, the upside of the pair might be limited amid the possibility that the Swiss National Bank (SNB) could intervene in the foreign exchange market. 

The Fed governor Christopher Waller said on Wednesday that the US central bank was in no rush to cut interest rates as elevated inflation indicated that the current rates needed more time to work. Meanwhile, Fed Governor Lisa Cook stated on Monday that the path of disinflation has been bumpy, but a cautious approach to further policy shifts can ensure that inflation will return sustainably to the 2% target. The high-for-longer US rate narrative might lift the Greenback and create a tailwind for the pair in the near term. 

On the other hand, the Swiss National Bank (SNB) Vice President Martin Schlegel said on Wednesday that the Swiss central bank will monitor the exchange rate closely and intervene in the foreign exchange market as necessary, even though it has no target for the Swiss Franc (CHF) exchange rate. Last week, the SNB surprised the market by cutting its benchmark interest rate for the first time in nine years, which triggered the sell-off in the CHF in previous sessions. The speculation of SNB’s intervention might cap the downside of the CHF against the USD.  

Additionally, the escalating geopolitical tensions in the Middle East might benefit safe-haven currencies like the Swiss Franc. The Palestinian Red Crescent said that Israeli forces besieged two more Gaza hospitals on Sunday, pinning down medical teams under heavy gunfire.

Later on Friday, the US Core Personal Consumption Expenditures (PCE) Price Index will be due. The Fed’s preferred inflation gauge is estimated to remain stable at 2.8% YoY. The market is likely to be mute in light trading on Good Friday.

• USD/CHF gains ground on risk-off sentiment ahead of US data.
• US GDP Annualized is expected to remain consistent at 3.2% in the fourth quarter of 2023.
• KOF Leading Indicator is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.

USD/CHF moves higher to near 0.9060 during the early European session on Thursday. The US Dollar (USD) receives upward support against the Swiss Franc (CHF), which could be attributed to the risk aversion ahead of the key economic figures from the United States (US).

Traders adopt a cautious stance ahead of the releases of Gross Domestic Product Annualized and Initial Jobless Claims data scheduled to be released on Thursday. Furthermore, Personal Consumption Expenditures is set to be revealed on Friday.

US Dollar Index (DXY) rises to near 104.50, with higher 2-year and 10-year yields on US coupon bonds standing at 4.61% and 4.20%, respectively, by the press time. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are adding to market uncertainty.

Federal Reserve Board Governor Christopher Waller continues to advocate for a cautious approach toward rate cuts, citing persistent inflation data. Atlanta Fed President Raphael Bostic shares this sentiment, foreseeing only one rate cut this year and warning against premature reductions that could worsen economic disruptions.

In other news, the ZEW Survey – Expectations rose by 1.3 points in March to reach 11.5, the highest level since October 2021. This increase was supported by the Swiss National Bank's decision to lower its interest rate by 25 basis points to 1.5%. Following the announcement, the Swiss Franc (CHF) weakened further year-to-date, as the SNB's move is likely to undermine the currency, being the first G10 central bank to implement such a cut.

Looking ahead, the Swiss Leading Indicator, to be released on Thursday by the KOF Swiss Economic Institute, is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.