During the European session, the USD/CHF pair regained the key psychological resistance level of 0.9000, with the Swiss Franc rebounding despite a slight easing of the US Dollar from its monthly high. The unexpected rate cut decision by the Swiss National Bank (SNB) contributed to the weakening of the Swiss Franc, thereby bolstering demand for the currency pair.
Last week, the SNB announced a 25 basis points (bps) rate cut, lowering interest rates to 1.50%, contrary to market expectations of unchanged rates. This move marked the initiation of a rate-cutting cycle and positioned the SNB as the first among central banks of developed nations to take such action.
Meanwhile, in the London session, S&P 500 futures displayed notable gains, signaling an improvement in market participants’ risk appetite. The US Dollar Index (DXY) declined to 104.10 as Federal Reserve (Fed) policymakers maintained confidence in easing underlying inflation, despite persistent price pressures in January and February. Concurrently, 10-year US Treasury yields fell to 4.25% on strong expectations of interest rate reductions commencing from the June policy meeting.
Although higher house rentals have notably contributed to US inflation, policymakers expressed confidence in inflation receding to the 2% target. Chicago Federal Reserve Bank President Austan Goolsbee, in an interview with Yahoo Finance on Monday, indicated a cautious stance, stating, “So we’re in an uncertain state, but it doesn’t feel to me like we’ve changed fundamentally the story that we’re getting back to target.” Goolsbee further predicted three rate cuts for the year in the March monetary policy meeting.
Looking ahead, the trajectory of the US Dollar in the coming days will be influenced by the release of the US core Personal Consumption Expenditure price index (PCE) for February, scheduled for Friday.
