Anna 
During the early European session on Monday, the USD/CHF pair experienced a lack of momentum, reflecting the consolidation of the US Dollar (USD). Traders opted to remain on the sidelines ahead of the upcoming US Federal Open Market Committee’s (FOMC) monetary policy meeting scheduled for Wednesday, with expectations leaning towards no change in interest rates. Currently, the USD/CHF pair trades near 0.8535, marking a slight 0.04% decline for the day.
Anticipation surrounds the FOMC’s interest rate decision, with investors foreseeing the committee maintaining benchmark interest rates within the range of 5.25%–5.50% during its March meeting. Market indicators suggest a probability of approximately 75% for a rate cut by the FOMC in July, according to the CME FedWatch Tools. Nevertheless, the prevailing narrative of higher interest rates in the US may bolster the Greenback and provide support for the USD/CHF pair in the near term.
On the data front, the University of Michigan’s Consumer Sentiment Index declined to 76.5 in March from the previous reading of 76.9, as reported on Friday. Meanwhile, one-year and five-year inflation expectations remained unchanged at 3.0% and 2.9%, respectively. Industrial Production rebounded to 0.1% MoM in February from a 0.5% MoM decline in January.
In geopolitical news, Israeli warplanes conducted fresh airstrikes in southern Lebanon on Sunday, according to Anadolu Agency. Additionally, Lebanese group Hezbollah claimed to have targeted Israeli soldiers near the village of Wazzani. Heightened tensions in the Middle East could bolster safe-haven assets like the Swiss Franc (CHF) and potentially limit the upside of the USD/CHF pair.
Looking ahead, the Swiss National Bank (SNB) is expected to keep interest rates unchanged on Thursday, although Bloomberg economists suggest a possible rate cut of 25 basis points in June. Market focus will also be on the Swiss Trade Balance for February on Tuesday, followed by the FOMC rate decision on Wednesday and the SNB’s interest rate decision on Thursday. These events are likely to provide clarity and direction for the USD/CHF pair.
