During early European trading hours on Monday, the USD/CHF pair exhibited strength, hovering near 0.9150. The US Dollar (USD) received support from expectations of interest rate cuts by the US Federal Reserve (Fed), which bolstered the pair’s performance. Investors are keenly awaiting Swiss National Bank (SNB) Chairman Thomas Jordan’s speech on Tuesday for potential market-moving insights ahead of Switzerland’s Gross Domestic Product (GDP) release for Q1.
The USD’s strength is further reinforced by hawkish signals from Fed policymakers, emphasizing their commitment to maintaining higher borrowing costs for an extended period. This stance follows a series of inflation data releases indicating persistent inflation levels exceeding the Fed’s 2% target.
Moreover, upbeat US economic data released on Friday contributed to speculation of a delay in the easing cycle this year. Notably, US Durable Goods Orders for April surpassed expectations, rising by 0.7% month-on-month, following a revised 0.8% increase in March. Additionally, the University of Michigan Consumer Sentiment Index for May, while slightly lower than April, surpassed market estimates.
On the Swiss front, geopolitical tensions intensified following reports of Israeli air attacks on a camp in Rafah for displaced people in Gaza, resulting in casualties. Market participants are closely monitoring developments in the Middle East for signs of escalating tensions, which could drive safe-haven flows towards the Swiss Franc (CHF), potentially hindering USD/CHF performance.
As geopolitical risks persist, any indication of heightened tension may favor the CHF, posing challenges for USD/CHF. Traders will remain vigilant for further developments in geopolitical dynamics and central bank rhetoric for insights into the pair’s direction.
