USD/CHF Nears 0.9000, Boosted by Expectations of Fewer Fed Rate Cuts

The USD/CHF pair has recovered its recent losses from the past two sessions, trading around 0.9000 during European hours on Friday, following thin trading activity after the Christmas holiday.

This recovery can be attributed to a stronger US Dollar (USD), supported by growing expectations that the US Federal Reserve (Fed) will cut rates less than previously anticipated.

In December, the Fed lowered interest rates by a quarter point and revised its 2025 projection to just two rate cuts, down from four earlier forecasts. However, the chances of further rate cuts were tempered by moderate US PCE inflation data.

The US Dollar Index (DXY), which tracks the USD against six major currencies, is above 108.00, slightly below its highest level since November 2022.

 Despite this, the upside of the US Dollar could be limited as US Treasury bond yields remain subdued, with 2-year and 10-year yields standing at 4.33% and 4.58%, respectively.

On the other hand, the USD/CHF pair has faced pressure as the Swiss Franc (CHF) gained strength following the release of Swiss GDP data, which showed better-than-expected economic growth and a year-over-year acceleration in Q3.

However, remarks from Swiss National Bank President Martin Schlegel, suggesting the possibility of interest rates in Switzerland dropping below zero, have kept traders cautious.

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