The USD/CHF pair faced selling pressure after briefly touching the 0.8515 level, marking a one-week high, and slipped to a fresh daily low during early European trading on Thursday. Spot prices are currently hovering around the 0.8455-0.8460 range, almost unchanged for the day, as the pair continues to trade within a familiar range established since the start of the month.
The US Dollar (USD) is experiencing renewed selling pressure, stalling its post-Federal Open Market Committee (FOMC) recovery from the lowest levels seen since July 2023, which in turn has weighed on the USD/CHF pair. The Federal Reserve’s less dovish stance on Wednesday cast doubt on the extent of future interest rate cuts, lending some underlying support to the Greenback. Notably, updated economic projections from the Fed indicate that inflation is not expected to return to the 2% target before 2026.
During the post-meeting press conference, Fed Chair Jerome Powell emphasized that the central bank does not plan to return to an ultra-low-rate environment, dampening expectations of aggressive policy easing. This hawkish tone has been a driving force behind rising US Treasury yields, providing a supportive backdrop for the US Dollar. Meanwhile, a positive risk sentiment could undermine the safe-haven appeal of the Swiss Franc (CHF), helping limit the downside for the USD/CHF pair.
Additionally, Switzerland’s State Secretariat for Economic Affairs (SECO) reiterated in its June forecasts that economic growth for 2024 and 2025 is expected to be significantly below average. This outlook warrants caution for bearish traders, potentially limiting further depreciation of the USD/CHF pair.
Market participants are now turning their attention to upcoming US macroeconomic data, including Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales, which could offer fresh trading opportunities and short-term direction for the USD/CHF pair.
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