The USD/CHF pair edged higher on Wednesday during early European trading hours, reaching close to 0.8950 and ending a four-day losing streak. The US Dollar (USD) saw a recovery from its 11-week low despite concerns stemming from weak US economic data and trade tariff fears raised by President Donald Trump.
The US Dollar’s rebound was partly attributed to the cautious stance from the US Federal Reserve (Fed), which has limited the currency‘s losses. Richmond Fed President Thomas Barkin indicated late Tuesday that he would adopt a wait-and-see approach regarding interest rate decisions until inflation shows clearer signs of returning to the Fed’s 2% target. Similarly, Chicago Fed President Austan Goolsbee emphasized on Monday that the central bank requires more clarity before considering rate cuts.
However, the release of the US Conference Board’s Consumer Confidence Index, which dropped sharply to 98.3 in February from 105.3 in January—its largest decline since August 2021—could dampen investor sentiment and exert downward pressure on the US Dollar. This weak data, coupled with other economic indicators, has fueled market expectations of at least two quarter-point rate cuts by the Fed this year, with the next expected in July, according to the CME FedWatch tool.
In addition, geopolitical uncertainty, particularly the ongoing Russia-Ukraine conflict, may continue to boost demand for the Swiss Franc (CHF), traditionally seen as a safe-haven currency. Russian President Vladimir Putin remarked on Monday that Europe’s involvement in Ukraine peace talks would eventually be necessary, though Moscow is prioritizing building trust with Washington first, suggesting that a resolution to the conflict may still be far off.
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