USD/CHF seeks stability above 0.8600 as USD Index refreshes day’s high

• USD/CHF is looking for a stabilized auction above 0.8600 amid a recovery in the US Dollar Index.
• US equities are expected to remain uncertain as further movement will be guided by the second-quarter result season.
• Fed Waller commented that two more interest rate hikes are still appropriate by the year-end.

The USD/CHF pair is aiming for stability above the round-level resistance of 0.8600 in the early New York session. The Swiss Franc asset has found some strength as the US Dollar Index (DXY) has printed a fresh day’s high after building a base below the psychological resistance of 100.00.

S&P500 is expected to open on a muted note following cues from overnight action in futures. US equities are expected to remain uncertain as further movement will be guided by the second-quarter result season. The overall market mood is quite cautious amid obscurity among market participants.

The US Dollar Index has refreshed its day’s high around 100.00. The action in the USD Index seems the outcome of oversold signals by momentum oscillators as fundamentals are still not supportive. Following USD’s action, the u-year US Treasury yields have also rebounded to near 3.81%.

As inflation has softened dramatically and the labor market is not extremely tight as it used to be, hopes for only one more interest rate from the Federal Reserve (Fed) by the year-end have remained firm. Contrary to that, Fed policymakers are still not convinced.

Last week, Fed Governor Christopher Waller commented that two more interest rate hikes are still appropriate by the year-end. While the commentary from Chicago Fed Bank Austan Goolsbee conveyed that inflation is progressively declining but still a lot of work to do.

On the Swiss Franc front, more interest rate hikes from the Swiss National Bank (SNB) are highly anticipated despite inflation having displayed a print below 2%. For keeping inflation steadily below 2%, SNB Chairman Thomas J. Jordan would raise interest rates further in September.