USD/CHF moved lower on Wednesday, trading near 0.8060 at the time of writing and extending its pullback from a near three-week high just above 0.8100. A softening US Dollar (USD) tone continues to pressure the pair as investors increasingly price in further Federal Reserve (Fed) easing.
Fed rate-cut expectations build as us data softens
Tuesday’s delayed US data reaffirmed the likelihood of a December rate cut. The Producer Price Index showed easing inflation, Retail Sales rose less than expected and the Consumer Confidence Index fell sharply – collectively pointing to a cooling labor market and giving the Fed greater flexibility to loosen policy.
Fed officials have recently echoed this dovish stance, with several policymakers signaling that another 25-basis-point cut remains on the table for December. Markets now assign roughly an 85% probability of a rate cut at next month’s meeting, keeping the Dollar under pressure and weighing on USD/CHF.
SNB’s steady stance adds to downside pressure on the pair
In contrast to the Fed’s evolving dovish tone, the Swiss National Bank (SNB) is widely expected to keep its policy rate anchored at 0.00% over the long term—potentially through 2027, according to analyst projections. This policy divergence continues to work against the greenback and favors additional downside in USD/CHF.
Risk sentiment improves, limiting Franc demand
Improving diplomatic sentiment surrounding talks involving the United States, Ukraine and Russia has slightly reduced safe-haven demand for the Swiss Franc. This shift has helped limit further declines in USD/CHF, even as the broader bias remains tilted to the downside.
Looking ahead, traders will focus on the delayed Durable Goods Orders and weekly Jobless Claims data. Any surprises – particularly stronger-than-expected numbers – could briefly support the Dollar, though the overarching narrative of a dovish Fed is likely to keep rallies capped.
