- USD/CHF struggles to lure buyers as July Fed rate cut bets weigh heavily on the USD.
- The Israel-Iran ceasefire further undermines the USD’s global reserve currency status.
- Bearish traders seem reluctant ahead of Fed Chair Powell’s congressional testimony.
The USD/CHF pair remains depressed for the second straight day and drops to over a one-week low during the Asian session on Tuesday amid a broadly weaker US Dollar (USD). Spot prices, however, lack follow-through selling and manage to hold above the 0.8100 mark.
Traders ramped up their bets for a potential interest rate cut by the Federal Reserve (Fed) in July following the release of mixed US PMIs and dovish-sounding remarks from influential FOMC members on Monday. Apart from this, the optimism led by US President Donald Trump’s announcement, that Israel and Iran had agreed to a ceasefire, undermines the Greenback’s status as the global reserve currency.
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, which disappointed some investors expecting that rates might return to negative territory this year. This, in turn, acts as a headwind for the USD/CHF pair. Moreover, the overnight breakdown below the 0.8150 support backs the case for further intraday losses.
Traders, however, seem reluctant to place aggressive directional bets and opt to wait for cues about the Fed’s future rate cut path. Hence, the focus remains glued to speeches from a slew of FOMC members and Fed Chair Jerome Powell’s congressional testimony. Apart from this, the Conference Board’s US Consumer Confidence Index would drive the USD and provide some impetus to the USD/CHF pair.
