USD/CHF trades weak around 0.7950 in Friday’s European session, pressured by growing expectations that the Federal Reserve will deliver more than one rate cut in 2026.
Fed expectations:
- CME FedWatch: ~58% probability of two or more cuts by October 2026.
- Fed dot plot: signals the policy rate falling to 3.4% by end-2026, implying just one cut next year.
- This divergence keeps the US Dollar soft.
US Dollar backdrop:
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The DXY is attempting to rebound after touching a seven-week low near 98.15 on Thursday.
Key data ahead:
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US November Nonfarm Payrolls (NFP): due Tuesday, likely the next driver for USD and Fed rate expectations.
Swiss Franc dynamics:
- CHF remains firm after Thursday’s SNB policy meeting.
- SNB held the policy rate at 0%, reaffirmed a high bar for returning to negative rates, and signaled that its dovish stance should support inflation and growth in the coming quarters.
Overall tone:
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USD/CHF bias stays bearish unless the USD finds support from upcoming US data or a shift in Fed pricing.
