The USD/CHF pair is facing challenges as the US Dollar weakens due to lower yields. The US Dollar Index is down to around 105.70, causing the USD/CHF to retrace its recent gains and trade around 0.8930. The decline in the 2-year and 10-year yields on US Treasury bonds is contributing to this downward correction.
Speculation about a possible delay in the Federal Reserve’s rate cut is supporting the Greenback, following stronger than expected US PMI data. There is a 65.9% chance of a Fed rate cut in September, slightly lower than the previous week’s 70.2%.
The Swiss Franc is expected to struggle further as the Swiss National Bank is likely to implement another rate cut in September. The recent rate cut by the SNB from 1.50% to 1.25% has already put pressure on the Swiss Franc, as indicated by SNB Chairman Thomas Jordan’s comments about the currency strengthening significantly.
Traders will be keeping an eye on the ZEW Survey Expectations for insights into business and employment conditions in Switzerland. This survey will be released by the Centre for European Economic Research on Wednesday.