USD/CHF rebounds near 0.9300 ahead of SNB’s policy and hawkish Fed policymakers’ comments

• USD/CHF has retested Monday’s low and has rebounded ahead of the SNB’s interest rate decision.
• Fed policymakers have raised the odds of a 50 bps interest rate hike significantly.
• SNB is more likely to maintain the status quo despite a higher February inflation print.

The USD/CHF pair has attracted some bids near 0.9300 and has managed to defend Monday’s low in a similar area as investors are on the sidelines before the announcement of the interest rate decision by the Swiss National Bank (SNB).

The major has remained in the negative territory after printing a fresh 50-week high at 0.9460 last week. More likely, the SNB will keep its monetary policy unchanged and interest rates stable at -0.75%. It is worth noting that the SNB has been keeping its borrowing rates unchanged since the mid of 2015. However, the SNB may turn to a hawkish stance for June’s monetary policy as the annual inflation rate in Switzerland climbed to 2.2% in February of 2022, the highest since October of 2008. The inflation print of 2.2% is above the targeted cap of 2%, which may force the SNB policymakers to tone hawkish going forward.

Meanwhile, the US dollar index (DXY) is facing barricades near 99.00 but rising odds of a 50 basis point (bps) interest rate hike in May’s monetary policy may fetch a fresh impulsive wave further. The speeches from the Federal Open Market Committee (FOMC) have underpinned the chances of an aggressive hawkish stance from the Fed.

San Francisco Fed Bank President Mary Daly has claimed that interest rates may settle around 2.5%, which will be required to corner the inflation mess while Cleveland Fed Bank President Loretta Mester has advocated 50 bps interest rate hikes by the Fed more than once by the end of 2022.