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The U.S. dollar (USD) fell during early European trading on Wednesday, with USD/CHF falling to around 0.8820. Safe-haven flows and expectations of a rate cut by the Federal Reserve (FED) in September dragged the pair lower. Investors are awaiting the Federal Reserve’s rate decision on Wednesday for new catalysts.
The Federal Reserve is expected to hold its benchmark interest rate steady at a 23-year high of 5.25% to 5.5% at its upcoming meeting on Wednesday. Market focus is on the upcoming Federal Reserve policy meeting on Wednesday, July 31, 2024. No change is expected, but the view of a possible interest rate cut in September increases the possibility of a weaker dollar.
Federal Reserve Chairman Jerome Powell’s remarks at a press conference may provide some hints on interest rate cut bets in September. Powell’s dovish comments could continue to weaken green cards broadly.
On the other hand, the Swiss franc may benefit from safe-haven flows amid economic uncertainty and further geopolitical tensions in the Middle East. Israel carried out an airstrike on a densely populated neighborhood on the outskirts of the Lebanese capital on Tuesday, claiming it killed a senior Hezbollah commander responsible for last weekend’s attack on the Israeli-occupied Golan Heights, The Washington Post reported. Responsible for the deaths of 12 children.
