Market Analysis

USD/CHF is currently trading around 0.8980 during the European session on Thursday, struggling to maintain its position near the recent peak of 0.8983 reached on Wednesday. Traders are awaiting the release of the US Q1 Annualized GDP data later in the North American session, with expectations of a slight uptick to 1.4% from the previous growth rate of 1.3%.

The US Dollar (USD) appears under pressure, possibly due to market anticipation of Friday's Core PCE Price Index, which is forecasted to show a year-over-year decline to 2.6% from the previous 2.8%. This index is closely watched by the Federal Reserve (Fed) as a key inflation gauge. Investors hope that signs of easing inflation could prompt the Fed to consider rate cuts sooner rather than later.

Support for the US Dollar Index (DXY), which measures USD against a basket of major currencies, could come from higher US Treasury yields. As of now, the 2-year and 10-year yields are at 4.75% and 4.33% respectively.

According to Reuters, Fed Governor Michelle Bowman reiterated her stance on Tuesday that maintaining the policy rate could sufficiently control inflation. Meanwhile, Fed Governor Lisa Cook suggested that it might be appropriate to reduce interest rates "at some point," citing progress in inflation moderation and a gradual slowdown in the labor market. However, Cook did not specify the timing of potential rate cuts.

On the Swiss side, the economic calendar for the session is quiet, leaving the USD/CHF pair influenced by broader market trends and upcoming US data. On Friday, the KOF Swiss Economic Institute is expected to release the Swiss Leading Indicator for June, with forecasts pointing to an improved reading of 101.0 compared to the previous 100.3.

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