- Swiss Franc ticks lower against the US Dollar as the latter rebounds.
- Higher oil prices could force traders to raise hawkish Fed bets again.
- Investors await FOMC Minutes of the July policy meeting.
The Swiss Franc (CHF) trades marginally lower against the US Dollar (USD) in the early European trading session on Tuesday, with the USD/CHF pair edging up to near 0.8116. The Swiss Franc pair rises as the US Dollar bounces back amid fears that surging oil prices could re-ignite hawkish Federal Reserve (Fed) interest rate expectations.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 99.65. The USD Index recovered on Monday after posting a fresh two-month low at 99.29.
The WTI Oil price has hit a fresh two-week high near $84.50 as United States (US) President Donald Trump confirmed no renewal of the US-Iran ceasefire.
In the last few weeks, traders have pared Fed interest rate hike expectations due to soft US economic data for July.
Fed hike bets fade as HSBC sees September hold risk rising
Analysts at HSBC Asset Management highlight that “market pricing for a September Federal Reserve rate hike has fallen to its lowest level since mid-June,” as investors reassess the policy outlook. They note that expectations have been squeezed lower, “wedged between Warsh’s comments and the benign CPI print,” while “a softer labour report has also weighed on rate expectations.” HSBC adds that “if August inflation and employment data show more of the same, the Fed is likely to stay on hold in September,” underscoring the importance of upcoming US data in shaping the near-term rate path.
Going forward, investors will focus on the US Federal Open Market Committee (FOMC) minutes of the July policy meeting, which will be released on Wednesday.
Meanwhile, the price action in the Swiss Franc is expected to be driven by geopolitical headlines, as the Switzerland economic calendar has nothing much to offer this week.
Technical Analysis
In the daily chart, USD/CHF trades at 0.8115, holding marginally above the 20-day exponential moving average (EMA) at 0.8111, which lends a mild bullish bias in the near term. The Relative Strength Index (RSI) at 51.89 sits just above the neutral 50 line, suggesting steady but unspectacular upside momentum as the pair consolidates after its recent recovery from the 0.8050 area.
On the downside, immediate support is located at the 20-day EMA at 0.8111, and a close below this level would hint at fading bullish pressure and a deeper pullback toward recent lows. As long as the pair holds above this moving average, dip-buying interest is likely to persist, keeping the short-term structure constructive while traders watch for a stronger momentum pickup to extend gains.
