Ella 
USD/CHF hit its highest levels since late June during the Asian session on Thursday, with bulls now looking to build further momentum and break above the psychological 0.9000 mark.
Spurred by the Fed’s hawkish remarks the day before, USD/CHF rebounded from a one-week low and is now close to a six-month high, which is another “tailwind” for USD/CHF. As expected, the Federal Reserve on Wednesday decided to keep the benchmark federal funds rate unchanged but said it would raise rates one more time before the end of the year. In fact, the so-called “dot plot” predicts rates will peak in 2023 at between 5.5% and 5.75%. Additionally, policymakers now see the benchmark interest rate at 5.1% next year, suggesting just two rate cuts will be needed in 2024, compared with the four previously expected.
That reaffirmed the Fed’s argument that it will “keep interest rates at higher levels longer,” and pushed the rate-sensitive two-year U.S. government bond yield to a 17-year high. In addition, the 10-year U.S. Treasury yield has climbed to its highest level since late 2007, which will continue to boost USD/CHF and continue the strong upward trend of USD/CHF over the past two months. With the latest rise in USD/CHF, USD/CHF has now rebounded around 450 pips from July’s swing lows, although some follow-through buying and buy-in above the 0.9000 mark are needed to support the prospects of further gains. . Market focus now turns to the Swiss National Bank (SNB) policy meeting to be held on Thursday.
Nevertheless, a series of recent weak real economic data, overall inflation and core inflation are both below 2%, and the Swiss franc has strengthened against European currencies, which may force the central bank to limit further tightening policies. Therefore, the market will closely monitor the monetary policy statement for clues on the path of future interest rate hikes and provide some momentum for USD/CHF.
Later in the early U.S. session, U.S. economic data typically including weekly jobless claims, Philadelphia Fed manufacturing index and existing home sales data will also be viewed as short-term trading opportunities for USD/CHF. However, the fundamental backdrop above appears to favor USD bulls, indicating minimal upside resistance for USD/CHF. Therefore, if the SNB adopts a more hawkish stance, it is more likely to be seen as an opportunity for bullish traders, while this rally remains limited.
