The USD/CHF pair continued its decline during the Asian session, dropping below the key psychological level of 0.9000 to reach a multi-day low. This marks the third consecutive day of downward movement, driven by persistent US Dollar weakness against major currencies.
Recent softer US macroeconomic data, particularly reflecting weakness in the labor market and economic momentum by the end of the second quarter, has heightened expectations of Federal Reserve rate cuts starting as early as September. This sentiment has weighed on the USD Index (DXY), pushing it to a three-week low and consequently exerting downward pressure on USD/CHF.
Market participants are now focusing on the upcoming US Nonfarm Payrolls (NFP) report, due later in the North American session, for further insights into US economic health. This report is pivotal in shaping expectations around future Fed policy actions and will likely influence near-term USD demand, thereby impacting the USD/CHF pair’s trajectory.
In contrast, recent Swiss economic data, including the Consumer Price Index (CPI), has shown signs of slight moderation, potentially providing room for the Swiss National Bank (SNB) to consider easing monetary policy further. The SNB’s readiness to intervene in the foreign exchange market could also prevent excessive strengthening of the Swiss Franc (CHF) and lend support to USD/CHF.
Overall, while USD/CHF faces downward pressure amidst USD weakness and upcoming economic data releases, the SNB’s intervention stance and market reactions to the NFP report will be critical in determining short-term movements.
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