USD/CHF trades with negative bias below 0.8200; remains confined in a familiar range
USD/CHF struggles to gain any meaningful traction amid mixed fundamental cues.
The SNB’s hawkish signal and rising geopolitical risks underpin the safe-haven CHF.
Reduced bets for more aggressive Fed rate cuts support the USD and spot prices.
The USD/CHF pair attracts some sellers in the vicinity of the 0.8200 mark and slides to the lower end of a nearly one-week-old range during the early part of the European session on Monday. Spot prices currently trade around the 0.8165-0.8160 area, down 0.20% for the day, though the downside seems cushioned on the back of a modest US Dollar (USD) strength.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to a nearly two-week high amid the Federal Reserve's (Fed) hawkish stance. The US central bank retained its projection for two rate cuts by the end of 2025 but lowered the forecast to only one 25-basis point rate cut in each of 2026 and 2027 amid concern that US President Donald Trump's tariffs could push up consumer prices. This, in turn, is seen acting as a tailwind for the buck and the USD/CHF pair.
The Swiss Franc (CHF), on the other hand, draws support from the Swiss National Bank's (SNB) signal that it does not plan more interest rate cuts, disappointing investors expecting that rates might return to negative territory this year. Meanwhile, rising geopolitical tensions in the Middle East and trade-related uncertainties temper investors' appetite for riskier assets. This is seen as another factor underpinning the safe-haven CHF and exerting some downward pressure on the USD/CHF pair.
The aforementioned mixed fundamental backdrop, however, warrants some caution before placing aggressive directional bets. Next on tap is the release of the flash US PMIs, which might influence the global risk sentiment and drive the CHF later during the North American session as traders keenly await Iran's response to US airstrikes on its nuclear facilities. Apart from this, the USD price dynamics might contribute to producing short-term trading opportunities around the USD/CHF pair.
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