USD/CHF to remain below 0.9950 on subdued DXY, hopes of Fed’s rate hike advances

• USD/CHF is auctioning below 0.9950 on positive market sentiment.
• Fed’s focus on bringing price stability will force it to announce more rate hikes.
• The Swiss franc bulls are awaiting the release of the Industrial Production, which is due on Friday.

The USD/CHF pair is struggling below 0.9950 as the risk-on market mood deepens and safe-haven appeal loses strength. The pair has remained vulnerable after surrendering the psychological cushion of 1.0000 on Tuesday and has dropped to near 0.9920.

The US dollar index (DXY) has shifted into a correction phase after remaining firmer for the past few trading weeks. The DXY has tumbled to near 103.20 and has eased 1.5% after registering a fresh 19-year high at 105.00 last week. It looks like the market participants have already discounted the interest rate hikes, which are to be announced by the Federal Reserve (Fed) this year.

The Q&A session with Fed chair Jerome Powell at Wall Street Journal (WSJ), has cleared the intentions of the Fed towards bringing price stability to the economy. Mounting inflationary pressures are hurting the paychecks of the households. To contain the soaring inflation, the Fed would resort to deploying strict quantitative measures to scale down the heated inflation.

On the Swiss franc front, investors are awaiting the release of the Industrial Production numbers, which are due on Friday. Earlier, the Swiss Statistics reported the quarterly Industrial Production at 7.3%. A higher-than-expected figure will further strengthen the Swiss franc bulls against the greenback. Alternatively, the greenback bulls could regain control if the occurrence reverses.