The USD/CHF pair edged lower to around 0.8820 during the early European session on Wednesday as the US Dollar (USD) weakened. This decline is influenced by safe-haven flows and expectations of Federal Reserve (Fed) rate cuts in September. Investors are eagerly awaiting the Fed’s interest rate decision later today for fresh market catalysts.
The Fed is anticipated to maintain its benchmark rate at a 23-year high of 5.25% to 5.5% at the meeting. “Market focus is on the upcoming Fed policy meeting on Wednesday, July 31, 2024. No changes are expected, but the view of a potential rate cut in September increases the probability of dollar weakness,” said Jateen Trivedi, VP Research Analyst for Commodity and Currency at LKP Securities.
Remarks from Fed Chair Jerome Powell during the press conference may provide insights into potential rate cuts in September. Dovish comments from Powell could further weaken the Greenback.
Meanwhile, the Swiss Franc (CHF) might benefit from safe-haven flows amid ongoing economic uncertainty and escalating geopolitical tensions in the Middle East. The Washington Post reported that Israel conducted an airstrike on a densely populated neighborhood near Beirut, Lebanon, on Tuesday, claiming it killed a top Hezbollah commander responsible for the deaths of 12 children in the Israeli-occupied Golan Heights over the weekend.
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