Anna 
During Thursday’s European session, USD/CHF rebounded from intraday losses and turned positive following the Swiss National Bank’s (SNB) decision to cut interest rates by 25 basis points (bps) to 1.50% in its March meeting.
The move by the SNB comes in response to substantial declines in both inflation and growth over the past year. Despite the SNB’s projection for inflation to average 1.9% in 2024, the current inflation rate stands notably lower at 1.2%. However, there was a notable increase in the Consumer Price Index (CPI) in February, rising by 0.6%.
In contrast, the Federal Reserve is projecting a higher long-term policy rate through December, ticking up to 2.6% from 2.5%. Despite the Fed’s optimistic growth expectations, markets appear to be disregarding these projections, leading to a decline in the value of the US Dollar (USD).
The US Dollar Index (DXY) hovers around 103.30, mainly influenced by weaker US Treasury yields. Yields for the 2-year and 10-year bond coupons have fallen to 4.59% and 4.25%, respectively. This decline is attributed to the US Federal Reserve’s (Fed) reaffirmation of expectations for three interest rate cuts this year.
While the Federal Open Market Committee (FOMC) projects stronger growth throughout 2024 and 2025 than initially anticipated, investor sentiment suggests expectations of additional easing measures in 2024, indicating a divergence in central bank policy.
