Market Analysis

USD/CHF is rebounding from its recent losses seen in the last session and is trading near 0.9120 during early European trading on Tuesday. The US Dollar's strength is providing support to the USD/CHF pair, propelled by upbeat Retail Sales figures from the US, raising expectations of prolonged higher interest rates by the Federal Reserve.

The US Dollar Index (DXY) is extending its rally to around 106.30, while yields on US Treasury bonds for both the 2-year and 10-year are at 4.93% and 4.62%, respectively, at present. Heightened geopolitical tensions in the Middle East are prompting investors to flock to the safe-haven US Dollar.

Federal Reserve Bank of San Francisco President Mary Daly mentioned on Monday that although there's been notable progress on inflation, there's still more ground to cover. She stressed the importance of ensuring inflation is firmly on track toward the target before making any policy moves.

Meanwhile, Swiss Producer and Import Prices (MoM) in March showed steady growth, edging up by 0.1%. However, Producer and Import Prices (YoY) saw a more pronounced decline, contracting at a rate of 2.1% compared to the previous decrease of 2.0%.

The Swiss Franc had already experienced significant depreciation following the Swiss National Bank's surprise rate cut in March. With inflation moderating in March and business confidence remaining pessimistic, speculation in the market suggests the SNB might opt for another rate cut at its upcoming June meeting.

Paraphrasing text from "FX Street" all rights reserved by the original author.