CHF/USD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear supporting driver.
Key drivers:
• Rate gap: The Swiss National Bank's cautious stance on interest rates contrasts with the Federal Reserve's anticipated cuts, affecting the strength of both currencies.
• Risk/commodities: Ongoing geopolitical tensions surrounding the US, including potential military actions and trade disputes, are leading investors to gravitate towards the Swiss Franc, a traditional safe-haven currency.
• One macro factor: Increased scrutiny over the Federal Reserve's independence amid reports of possible criminal charges against its Chair is creating uncertainty for the US dollar.
Range: The CHF/USD is likely to hold within its recent range, showing limited movement as both currencies face pressure.
What could change it:
• Upside risk: A significant de-escalation of geopolitical tensions could boost the USD unexpectedly.
• Downside risk: Further rate cuts from the Federal Reserve could heighten USD weakness, enhancing demand for the CHF.
