The USD/CHF pair is trading with slight losses around 0.8995 in the early European session on Thursday, ending a three-day winning streak. This decline is mainly due to increasing expectations of a rate cut by the Federal Reserve (Fed). Investors are eagerly awaiting the US June Consumer Price Index (CPI) data, which is forecasted to show a 3.1% YoY increase in June.
Fed Chair Jerome Powell’s recent comments have been weakening the US Dollar, as he indicated that the case for interest rate cuts is growing stronger. Powell mentioned that recent inflation data showed some progress, and further positive data could lead to rate cuts in the future. The softer CPI data for June could fuel expectations of rate cuts in September, potentially putting pressure on the Greenback.
On the Swiss front, speculation that the Swiss National Bank (SNB) may cut interest rates further could weigh on the Swiss Franc (CHF). Political uncertainty in Europe and globally may also boost safe-haven flows, benefiting the CHF. The CHF is considered a safe-haven asset due to Switzerland’s stable economy, strong export sector, and political neutrality.
Overall, the outlook for the USD/CHF pair remains uncertain as market participants monitor economic data releases and central bank actions. The correlation between the Euro and the CHF is significant, given Switzerland’s economic ties to the Eurozone. Investors will continue to assess macroeconomic indicators to gauge the strength of the Swiss Franc.