The USD/CHF pair encounters resistance around the 0.8830 level, struggling to rebound after a retreat from nearly 0.8900 in early European trading hours on Monday. The dip in the pair is attributed to a weakening US Dollar (USD) and a decline in US Treasury bond yields. Market participants are keenly awaiting the Swiss February Consumer Price Index (CPI) for potential market direction, with expectations of a decrease from January’s 1.3% to 1.1% in February.
Adding to the pressure, the Institute for Supply Management (ISM) reported a downturn in the US Manufacturing Purchasing Managers Index (PMI) for February, falling to 47.8 from January’s 49.1, missing the market’s anticipation of 49.5.
Federal Reserve (Fed) officials Susan Collins and John Williams of Boston and New York, respectively, indicated the likelihood of a rate cut later in the year, with Atlanta’s Raphael Bostic suggesting a potential easing policy this summer if economic conditions align with expectations. The upcoming testimony from Fed Chair Jerome Powell on Wednesday is anticipated to provide crucial insights into inflation outlook and monetary policy. Any hawkish sentiments expressed may bolster the USD, providing support for the USD/CHF pair.
Meanwhile, on the Swiss economic front, January saw an unexpected drop in the annual inflation rate, prompting speculation of a rate cut by the Swiss National Bank (SNB) at its March meeting. Fresh impetus for the USD/CHF pair may emerge as the Swiss Federal Statistical Office releases the Consumer Price Index (CPI) for February later today, offering valuable cues for traders. Investors remain alert to potential policy shifts and economic indicators on both sides, navigating through a period of heightened uncertainty in the currency markets.
