Bias: The outlook for USD/CHF is bullish-to-range-bound since the current level is above the 90-day average and positioned in the upper half of the 3-month range.
Key drivers:
• Rate gap: The U.S. Federal Reserve is expected to implement rate cuts toward a neutral range, while the Swiss National Bank maintains a 0% policy rate amid low inflation, widening the interest rate differential in favor of the USD.
• Risk/commodities: Recent volatility in oil prices is likely affecting the USD, as rising oil prices can support the U.S. economy and increase USD demand.
• One macro factor: The uncertainty surrounding U.S.-China trade tensions continues to impact economic forecasts, fostering cautious optimism for the dollar.
Range: USD/CHF is likely to hold within its recent 3-month range, with limited movement expected as both currencies face different economic pressures.
What could change it:
• Upside risk: A stronger-than-expected U.S. employment report could spur further dollar gains.
• Downside risk: Renewed dovish signals from the Federal Reserve could weaken the USD against the CHF.
