USD/CHF turns sideways to 0.9880, downside remains favored as SNB intervenes

• USD/CHF is balancing below 0.9900 after the testimony of SNB’s Jordan.
• SNB’s Jordan dictated that CHF is a safe haven and that negative monetary policy will support targeted inflation.
• Fed policymakers are betting on two more interest rate hikes this year.

The USD/CHF pair is looking for an establishment below 0.9900 after witnessing a steep fall on Wednesday. The asset has remained vulnerable this week after failing to sustain above the psychological figure of 1.0000.

The Swiss franc bulls are strengthening against the greenback after the testimony of Swiss National Bank (SNB) Chairman Chris Jordan on Wednesday. SNB’s Jordan dictated in his speech that the Swiss franc (CHF) is a safe-haven asset and continuation of a negative monetary policy is necessary to justify the inflation parameter. The targeted inflation figure at 2% has been well maintained by the SNB and any temporary rise above the targeted figure will be diluted quickly due to intervention of the SNB. This week the spotlight will remain on Swiss Industrial Production. Earlier, it landed at 7.3%.

Meanwhile, the US dollar index (DXY) is weakened in front of the Swiss franc bulls despite soaring negative market sentiment. The DXY is hovering a little lower from 104.00 but is expected to surpass the figure amid an improved safe-haven appeal. Counting on galloping inflation, the Federal Reserve (Fed) may elevate its interest rates by 50 basis points (bps) twice in June and July. Philadelphia Fed Bank President Patrick Harker has favored a 25 bps rate hike tradition after announcing two jumbo rate hikes by the Fed in June and July.