USD/CHF Finds Resistance Above 0.9020 As USD Index Retreats

The USD/CHF pair has faced stiff barricades after a recovery move to near 0.9020 in the late European session. The Swiss Franc asset has resumed its downside journey as the US Dollar Index (DXY) has retreated. A sell-off move in the USD Index has come as investors hope that the Federal Reserve (Fed) could skip hiking interest rates in June.

S&P500 futures have recovered their entire losses posted in Europe as the market mood has turned cheerful as expectations for a neutral interest rate policy by the Fed have deepened. According to economists surveyed by Bloomberg, most economists expect the Fed to pause interest-rate increases next week for the first time in 15 months and leave policy on hold through December, even as it confronts a resilient US economy and persistent inflation.

Contrary to the street, International Monetary Fund (IM)F spokesperson Julie Kozack said on Thursday the Fed and other global central banks should continue their policy-tightening spell and remain committed to arresting inflation.

The USD Index has attracted significant offers after recovering to near 103.60 as an unchanged policy stance by the Fed would restrict its upside for a longer period. Meanwhile, the US Treasury yields have extended their gains further. The yields offered on 10-year US Treasury bonds have jumped above 3.76%.

A comparative analysis of the USD/CHF pair and the USD Index shows that the correction in the USD Index is stronger than in the Swiss Franc asset. This could result from hawkish commentary by Swiss National Bank (SNB) Chairman Thomas J. Jordan. SNB Jordan said it’s essential to bring Swiss inflation to a level of price stability,” He further added it would not be a good idea to wait for inflation to rise and then raise interest rates. Investors should note that the SNB has already raised interest rates to 1.50%.

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