USD/CHF stabilizes above 0.9000 ahead of Fed’s monetary policy meeting

• USD/CHF remains comfortable above 0.9000 as the focus shifts to Fed monetary policy.
• The market mood remains vulnerable as the Israeli army is all set for a ground assault in Gaza.
• Investors await the Fed policy and the speech from SNB Jordan.

The USD/CHF pair trades back and forth above the psychological resistance of 0.9000 in the early European session. The Swiss Franc asset aims to extend upside as investors remain cautious ahead of the interest rate decision by the Federal Reserve (Fed), which is scheduled for Wednesday.

S&P500 futures generated some losses in the Tokyo session, indicating a risk-off mood amid geopolitical tensions. The Israeli army is all set for a ground assault in Gaza to demolish Palestine military troops in retaliation to airstrikes from Hamas since October 7.

The US Dollar Index (DXY) struggles to extend upside above 106.40 as a neutral interest rate decision from the Fed is widely anticipated. However, the outlook would remain hawkish due to robust consumer spending, strong labor market conditions, and potential signs of recovery in the manufacturing and service sectors.

The market participants expect that excess price pressures above the 2% inflation target are the most stubborn as the US economy is resilient despite higher borrowing costs. Therefore, hawkish guidance would be appropriate. Apart from easing price pressures, higher US long-term bond yields are allowing Fed policymakers to keep interest rates steady. 10-year US Treasury yields have rebounded to near 4.88%.

On the Swiss Franc front, investors await the speech from Swiss National Bank (SNB) Chairman Thomas J. Jordan, which is scheduled for Wednesday. SNB Jordan is expected to discuss about keeping interest rates unchanged at 1.75% for a longer period to ensure price stability. This week, the Swiss inflation data for October will be keenly watched.