USD/CHF breathes around 0.9930 as DXY pauses, Fed’s mega rate hike odds trims

• USD/CHF is hovering around 0.9335 as the chances of a 75 bps rate hike have trimmed.
• The Swiss franc is underperforming on flat jobless rate and CPI numbers.
• The Fed has already hiked its rates by 75 bps in the last two monetary policies.

The greenback bulls are taking some rest after a juggernaut rally from a low of 0.9709, recorded last week. The USD/CHF pair has witnessed a sheer upside move right from the initial trading session of April. The momentum remained continued in the asset amid broader strength in the US dollar index (DXY) backed by a shift in the focus from releasing helicopter money to liquidity tightening policy.

The Federal Reserve (FED) has chosen the path of liquidity contraction from the economy to tame the galloping inflation. To address the same, the Fed has already hiked its interest rates by 75 basis points (bps) in the last two monetary policy announcements. Recently, investors were expecting a 75 bps rate hike in one go by the Fed in June’s policy. This triggered a negative market sentiment and investors were dumping the risk-sensitive currencies.

However, Atlanta Fed President Raphael Bostic has shrugged off the expectations of a 75 bps rate hike after stating that the Fed's most recent 50 bps rate hike was an "aggressive" move and that the Fed can stay at this pace.

Meanwhile, the demand for the Swiss franc has been dented after the economy reported flat Unemployment Rate and Inflation numbers last week. The former landed at 2.2% while the latter printed at 2.5%, both in line with the market consensus.