USD/CHF Outlook: Bearish, as the rate is currently below its recent average and near recent lows, influenced by significant US political and economic instability.
Key drivers:
• Rate gap: The Federal Reserve is expected to cut interest rates further amid ongoing economic concerns, which pressures the USD against the CHFs stability.
• Risk/commodities: Recent geopolitical tensions, particularly the threat of military actions, have increased risk aversion, leading investors to favor the safe-haven Swiss Franc.
• One macro factor: Speculation surrounding potential rate cuts by the Swiss National Bank due to deflationary pressures could shift currency dynamics.
Range: The USD/CHF rate is likely to drift within its recent range, as fluctuations may be limited with prevailing uncertainties.
What could change it:
• Upside risk: A reduction in geopolitical tensions could improve demand for the USD.
• Downside risk: A surge in US jobless claims or negative economic data may further weaken the USD against the CHF.