USD/CHF consolidates above mid-0.8100s; remains close to weekly high set on Thursday

• USD/CHF struggles to gain any meaningful traction amid a combination of diverging forces.

• Thursday’s SNB decision underpins the CHF and the Fed’s hawkish pause supports the USD.

• The mixed fundamental backdrop warrants some caution before placing directional bets.

The USD/CHF pair lacks a firm intraday directional bias on Friday and oscillates in a narrow band, just above mid-0.8100s through the first half of the European session. Nevertheless, spot prices, for now, seem to have stalled Thursday's retracement slide from levels just above the 0.8200 mark, or over a one-week high.

The Swiss Franc (CHF) draws some support from the Swiss National Bank's (SNB) hawkish outlook, signaling that it does not plan additional interest rate cuts. The announcement disappointed some investors expecting that rates might return to negative territory this year, which, along with rising geopolitical tensions in the Middle East, benefits the safe-haven CHF and acts as a headwind for the USD/CHF pair.

The US Dollar (USD), on the other hand, remains on the defensive, though it remains on track to register weekly gains on the back of hawkish signals from the Federal Reserve (Fed) earlier this week. In fact, the Fed retained the forecast for two rate cuts in 2025 but trimmed the outlook for rate cuts in 2026 and 2027. This acts as a tailwind for the buck and in turn, is seen acting as a tailwind for the USD/CHF pair.

Moving ahead, traders now look forward to the release of the Philly Fed Manufacturing Index and the Fed Monetary Policy Report, which might influence the USD price dynamics. Furthermore, developments surrounding the Israel-Iran conflict will drive the broader market risk sentiment and the safe-haven CHF. This should contribute to producing short-term trading opportunities around the USD/CHF pair.