USD/CHF falls below 0.9000 ahead of speeches by Fed Chair Powell and others

USD/CHF pared gains around 0.8970 in early European trading on Wednesday. The pair fell as the dollar weakened following the release of the semi-annual monetary policy report by Federal Reserve Chairman Jerome Powell on Wednesday.

Jerome Powell, Chairman of the U.S. Federal Reserve, said the central bank is gradually getting comfortable with rate cuts. He further said that evidence of cooling inflation and more “good data” could open the door to rate cuts.

According to the CME FedWatch Tool, financial markets are currently pricing in a 74% chance of a Fed rate cut in September, up from 71% on Friday. However, members of the Federal Open Market Committee (FOMC) indicated at their June meeting that only one rate cut is in the cards this year. Expectations of a Fed rate cut could put some selling pressure on the U.S. dollar (USD) in the short term.

Thursday’s U.S. Consumer Price Index (CPI) inflation data will be in focus this week, with traders focusing on a weaker dollar. The US CPI is expected to increase by 3.1% year-on-year in June, compared with 3.3% in May. Core inflation is expected to remain stable in June, with an expected year-on-year increase of 3.4%. Are there signs of further consolidation in the exchange rate?

In Switzerland, signs of cooling inflationary pressures in Switzerland may prompt the Swiss National Bank (SNB) to continue to cut interest rates further, which may put some selling pressure on the Swiss franc. Nevertheless, the Swiss franc’s downside may be limited due to political uncertainty in France and geopolitical tensions in the Middle East.

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