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- USD/CHF bulls remain on the sidelines amid the lack of any meaningful USD buying interest.
- Sustained safe-haven demand underpins the CHF and also contributes to capping the major.
- Traders seem reluctant to place aggressive directional bets ahead of the key FOMC meeting.
The USD/CHF pair struggles to capitalize on a modest Asian session uptick and is currently placed near the lower boundary of its daily range amid subdued US Dollar (USD) price action. Spot prices, however, manage to hold above the 0.8200 mark as traders opt to wait for the outcome of a two-day FOMC monetary policy meeting starting later today.
The Federal Reserve (Fed) is scheduled to announce its decision on Wednesday and is widely expected to leave interest rates steady. Moreover, traders have trimmed their bets that the Fed will cut rates in June following Friday’s upbeat US jobs data and the better-than-expected US ISM Services PMI on Monday. Hence, the focus will be on the accompanying policy statement and Fed Chair Jerome Powell’s remarks at the post-meeting press conference. Investors will look for cues about the Fed’s rate-cut path, which, in turn, will drive the USD and provide some meaningful impetus to the USD/CHF pair.
In the meantime, the heightened economic uncertainty led by US President Donald Trump’s erratic trade policies fails to assist the USD in attracting any meaningful buyers. Furthermore, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and escalating conflicts in the Middle East overshadow the recent optimism led by signs of easing US-China trade tensions. This, in turn, is seen lending some support to the safe-haven Swiss Franc (CHF) and contributes to capping the upside for the USD/CHF pair. Bearish trades, however, seem reluctant ahead of the key central bank event risk.
Hence, it will be prudent to wait for a sustained break and acceptance below the 0.8200 round figure before confirming that the recent recovery from the 0.8040 region, or the lowest level since September 2011 touched last month, has run out of steam. On the flip side, bulls might wait for a move beyond the 0.8300-0.8330 congestion zone before positioning for any further near-term appreciating move.
