During the early European session on Tuesday, the USD/CHF pair advanced near 0.9040, reaching its highest level since May 31. The pair received support from a stronger US Dollar and higher US bond yields, setting the stage for potential further gains.
Investors are eagerly awaiting Federal Reserve Chairman Jerome Powell’s speech later on Tuesday for fresh market direction. The strength in the Greenback and rising US Treasury yields have been pivotal in bolstering the pair.
Recent disappointing US economic data, including a below-consensus US Manufacturing Purchasing Managers Index (PMI) of 48.5 for June, released by the Institute for Supply Management (ISM), has fueled expectations of interest rate cuts by the Federal Reserve. Traders have adjusted their forecasts, pricing in a 59.5% probability of a 25 basis points rate cut in both September and December, according to the CME FedWatch Tool.
Despite these expectations, the Fed remains cautious, a stance that continues to support the US Dollar and Treasury yields. San Francisco Fed President Mary Daly underscored on Friday that sustained inflation could necessitate prolonged higher interest rates.
On the Swiss front, market focus shifts to the upcoming Swiss Consumer Price Index (CPI) data for June, scheduled for release on Thursday. This report will provide insights into potential monetary policy adjustments by the Swiss National Bank (SNB) in its September meeting.
Geopolitical tensions in the Middle East and political uncertainties also remain factors to monitor, potentially boosting safe-haven assets like the Swiss Franc (CHF). Such developments could impose limits on further upside for the USD/CHF pair amidst broader market dynamics.
The outlook for the USD/CHF pair hinges on upcoming economic indicators, central bank policies, and global geopolitical developments, shaping investor sentiment towards both currencies.
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