USD/CHF Struggles Amid Fed Rate Hike Uncertainty
The USD/CHF pair is struggling to take full advantage of its recent strong gains. Uncertainty surrounding the Fed's interest rate hike is keeping USD bulls on the defensive and limiting the upside. Traders are also hesitant to take aggressive positions ahead of the crucial US CPI report.
During the Asian session on Tuesday, the USD/CHF pair is trading within a narrow range below the 0.9100 level, consolidating the significant gains it made in the past two days.
The strengthening belief that the Federal Reserve (Fed) is likely to postpone a rate hike this month continues to weigh on the US Dollar (USD) and act as a hindrance for the USD/CHF pair. It's important to note that several influential Fed officials have recently reinforced market expectations of a temporary pause in the US central bank's year-long tightening cycle.
However, Fed fund futures indicate the possibility of a 25 basis point increase in the July FOMC meeting. This speculation gained traction following surprise rate hikes by other major central banks such as the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week, indicating that the fight against inflation is ongoing. Consequently, the USD losses are limited, supporting the USD/CHF pair.
Traders are also showing reluctance to take significant positions and are waiting for the release of the latest US consumer inflation data, which will be available later during the early North American session. This critical US CPI report will impact the Fed's policy outlook and drive USD demand, potentially providing momentum to the USD/CHF pair before the FOMC policy decision on Wednesday.
Furthermore, the generally positive sentiment in equity markets may weaken the safe-haven Swiss Franc (CHF) and offer some support to the USD/CHF pair. However, a slight decline in US Treasury bond yields could discourage traders from anticipating a substantial USD recovery. As a result, the pair is more likely to continue its subdued or range-bound trading pattern on Tuesday.
From a technical standpoint, there is a possibility of a price pullback within the 50% and 61.8% Fibonacci levels, followed by potential growth.
During the Asian session on Tuesday, the USD/CHF pair is trading within a narrow range below the 0.9100 level, consolidating the significant gains it made in the past two days.
The strengthening belief that the Federal Reserve (Fed) is likely to postpone a rate hike this month continues to weigh on the US Dollar (USD) and act as a hindrance for the USD/CHF pair. It's important to note that several influential Fed officials have recently reinforced market expectations of a temporary pause in the US central bank's year-long tightening cycle.
However, Fed fund futures indicate the possibility of a 25 basis point increase in the July FOMC meeting. This speculation gained traction following surprise rate hikes by other major central banks such as the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week, indicating that the fight against inflation is ongoing. Consequently, the USD losses are limited, supporting the USD/CHF pair.
Traders are also showing reluctance to take significant positions and are waiting for the release of the latest US consumer inflation data, which will be available later during the early North American session. This critical US CPI report will impact the Fed's policy outlook and drive USD demand, potentially providing momentum to the USD/CHF pair before the FOMC policy decision on Wednesday.
Furthermore, the generally positive sentiment in equity markets may weaken the safe-haven Swiss Franc (CHF) and offer some support to the USD/CHF pair. However, a slight decline in US Treasury bond yields could discourage traders from anticipating a substantial USD recovery. As a result, the pair is more likely to continue its subdued or range-bound trading pattern on Tuesday.
From a technical standpoint, there is a possibility of a price pullback within the 50% and 61.8% Fibonacci levels, followed by potential growth.
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