USD/CHF depreciates to near 0.9100, possibly due to improved risk appetite

• USD/CHF loses ground due to the improved risk appetite on Monday.
• Fed is expected to maintain its current interest rate range of 5.25%–5.5% in June.
• SNB Chairman Thomas Jordan stated that the central bank is prepared to lower interest rates again if deemed necessary.

USD/CHF retraces its recent gains that registered on Friday, trading around 0.9120 during the European session on Monday. The US Dollar (USD) depreciates, possibly reflecting a shift toward a risk-on sentiment, which undermines the USD/CHF pair.

However, market analysts expect the US Federal Reserve (Fed) to maintain the current interest rate range of 5.25%–5.5% in its upcoming policy meeting on Wednesday, likely due to concerns about stronger inflation. Additionally, the annual US Core Personal Consumption Expenditures (PCE) Price Index data for March showed a rise on last Friday, suggesting that the Fed may delay any potential rate cuts until September. According to the CME FedWatch Tool, the probability of the Fed keeping interest rates unchanged in the June meeting has increased to 87.7%, up from last week's 81.7%.

On the Swiss side, during the SNB's General Meeting of Shareholders on Friday, Chairman Thomas J. Jordan emphasized the bank's commitment to monitoring inflation closely. He stated that the SNB stands ready to reduce interest rates again when necessary. In March, the SNB surprised markets by lowering its main policy rate by 0.25 percentage points to 1.5%.

Chairman Jordan highlighted the SNB's success in combating inflation but cautioned that uncertainty remains high and shocks can arise unexpectedly. He emphasized the importance of maintaining focus on price stability and warned against calls from critics to broaden the SNB's mandate, labeling such demands as dangerous.

Investors are expected to closely watch the Consumer Price Index (CPI) data scheduled to be released by the Swiss Federal Statistical Office on Thursday. The CPI serves as the primary indicator for measuring inflation and changes in purchasing trends in Switzerland.