The USD/CHF pair has sharply declined from the psychological resistance level of 0.8500 during Thursday’s European session, following the Swiss National Bank’s (SNB) decision to cut interest rates by 25 basis points (bps) to 1%. This marks the third consecutive 25 bps reduction by the SNB, prompted by inflationary pressures in the Swiss economy that have exceeded the bank’s target of 2%. The annual Consumer Price Index (CPI) in Switzerland decelerated to 1.1% in August.
Meanwhile, the US Dollar (USD) is maintaining its recovery as Federal Reserve (Fed) officials, including Chair Jerome Powell, prepare to comment on economic conditions and interest rate expectations. Their remarks will help clarify whether the Fed will implement a second consecutive 50 bps cut in November or opt for a more gradual 25 bps reduction. The CME FedWatch Tool indicates that the likelihood of a 50 bps cut in November has risen to 61% from 39% a week earlier.
Investors are also anticipating the release of the US Personal Consumption Expenditure (PCE) Price Index data for August on Friday, with core PCE inflation expected to rise to 2.7%, up from 2.6% in July.
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