The USD/CHF pair trades on a weaker note near 0.8465 during Friday’s early European session. The US Dollar (USD) continues to face selling pressure following the Federal Reserve’s (Fed) unexpected 50 basis point (bps) interest rate cut on Wednesday. Traders now await Fed official Patrick Harker’s speech for further guidance.
The Fed’s decision to cut rates marks the first reduction since the COVID-19 pandemic, with Fed Chair Jerome Powell highlighting the need to “recalibrate” policy amid progress on inflation and employment. The Fed also hinted at another 50 bps cut before year-end, adding further bearish momentum to the USD.
On the Swiss front, Switzerland posted a trade surplus of 4.578 billion Swiss Francs in August, although both exports and imports declined.
Geopolitical risks are also influencing the market, as Israeli strikes on Hezbollah in southern Lebanon on Thursday have heightened tensions. This could drive safe-haven flows toward the Swiss Franc (CHF), adding downward pressure on USD/CHF.
Trade Idea:
Consider selling USD/CHF below 0.8460, targeting 0.8400 amid persistent USD weakness and safe-haven demand for CHF.