USD/CHF extends losses with traders awaiting Fed cut and Powell guidance

• USD/CHF weakens as the US Dollar stays under pressure ahead of the Fed interest rate decision.
• Markets remain convinced the Fed will deliver a 25 bps cut, with traders also watching for any hawkish signals in the guidance.
• SNB decision in focus, with economists widely expecting rates to remain at 0.00% as inflation sits near the lower bound of its target range.

The Swiss Franc (CHF) trades slightly firmer against the US Dollar (USD) on Wednesday, with USD/CHF extending losses for a second consecutive day as the Greenback stays on the back foot ahead of the Federal Reserve’s (Fed) interest rate decision at 19:00 GMT.

At the time of writing, the pair is trading around 0.8044, pressured by a softer USD and a cautious market mood ahead of the Fed decision.

Markets remain convinced the central bank will deliver another 25 basis point (bps) rate cut, which would bring the Federal Funds Rate down to the 3.50%-3.75% range.

With the rate cut almost fully priced in, attention will be squarely on Fed Chair Jerome Powell’s post-meeting press conference, along with the updated dot plot and economic projections, as speculation surrounding a hawkish cut builds.

The Fed has already eased policy twice this year, delivering back-to-back 25 bps reductions in September and October. Traders now expect the central bank could signal a pause through early 2026 as policymakers assess the impact of those earlier reductions, particularly while inflation remains above target and the labour market shows no signs of severe deterioration.

The updated dot plot will also play a crucial role in shaping market expectations. The September projections pointed to one rate cut in both 2026 and 2027, no change in 2028, and a longer-run policy rate anchored at 3.0%.

Markets will be watching closely to see whether the Committee shifts these forecasts higher, which would reinforce the prospect of a hawkish policy path and potentially offer some relief to the USD.

In Switzerland, attention is now turning to the Swiss National Bank’s (SNB) interest rate decision due on Thursday. Markets widely expect the SNB to keep its policy rate unchanged at 0.00%.

According to a Reuters poll, 38 of 40 economists forecast no change at the December 11 meeting, while only two anticipate a return to -0.25%. Reuters also reported that 21 of 25 economists expect the policy rate to remain at 0.00% through the end of 2026, with only a few projecting any cuts next year.

Inflation has eased toward the lower end of the SNB’s 0–2% target band, and policymakers have repeatedly indicated that the threshold for returning to negative rates remains very high. The central bank also expects inflation to edge slightly higher in the coming quarters, reinforcing expectations for a steady policy stance.