USD/CHF floats at 9.5-month low around 0.9250 after Fed’s verdict, SNB eyed

• USD/CHF remains sidelined at the lowest levels since March 31, probes two-day downtrend.
• Fed failed to impress US Dollar buyers but the USD/CHF bears remain cautious ahead of the SNB.
• SNB is expected to announce 0.50% rate hike but USD/CHF bulls need more than that to recover.

USD/CHF holds lower grounds near 0.9260, after declining to the fresh low in 9.5 months, as the pair traders await the Swiss National Bank (SNB) Monetary Policy Meeting early Thursday. That said, the Swiss currency pair recently cheered the broad US Dollar weakness to refresh the multi-day low as the Federal Reserve (Fed) fell short of impressing the Greenback bulls despite mildly hawkish announcements.

Fed delivered the 50 bps rate hike, as expected, and upwardly revised the dot-plot to suggest 5.1% as the terminal rate versus 4.6% shown in September’s Statement of Economic Projections (SEP). The US central bank also revised the inflation forecasts towards the north but the growth estimations were cut down for 2023 and 2024.

Elsewhere, Fed Chairman Jerome Powell defended his hawkish image while noting that the ultimate level of rates is more important than how fast they go. The policymaker also added that the Federal Open Market Committee (FOMC) needs to hold rates at their peak until policymakers are "really confident" that inflation comes down in a sustained way.

Following the Fed announcements, the US equities closed on the negative side but the US Treasury bond yields were down too, which in turn weighed on the USD/CHF prices.

Looking forward, USD/CHF traders should keep their eyes on the SNB announcements as the Swiss National Bank is widely expected to unveil a 0.50% rate hike and may sound a bit hawkish.

With this in mind, Citibank signaled, “Strong Franc, slowing Swiss economy, falling energy prices but also the shift in emphasis to balance sheet reduction speak against big rate hikes. However, interest rate differentials are already historically wide and with fewer meetings available, the SNB has to make bigger steps to keep up. We, therefore, expect a 75 bps hike this week.

Also read: SNB Preview: Forecasts from five major banks, new tightening to come

Technical analysis

USD/CHF bears remain in the driver’s seat unless the USD/CHF prices offer a daily closing beyond August month’s low near 0.9370.