USD/CHF Outlook:
The USD/CHF is currently below its recent average and near recent lows, indicating a bearish outlook. This situation is exacerbated by significant external pressures affecting both currencies.
Key drivers:
• Rate gap: The Federal Reserve continues its tightening policy while the Swiss National Bank (SNB) may consider easing measures, potentially widening the rate gap.
• Risk/commodities: Ongoing geopolitical tensions, particularly related to military actions involving the US, have driven safe-haven demand toward the Swiss franc.
• One macro factor: The US is facing economic challenges due to a government shutdown, which may stifle GDP growth and could weigh on the dollar's strength.
Range:
USD/CHF is likely to drift within its recent 3-month range, facing difficulty breaking upward.
What could change it:
• Upside risk: A shift in US economic data signaling stronger growth could boost the USD.
• Downside risk: Continued strength in the CHF due to external uncertainties may push the rate lower.