The USD/CHF pair has made a rapid recovery, surging past the critical resistance level of 0.8660, driven by positive economic indicators in the United States. The second-quarter Gross Domestic Product (GDP) and June’s Durable Goods Orders both surpassed expectations, while initial jobless claims were below consensus.

Investor sentiment remains optimistic as the S&P500 opens on a bullish note, with hopes that the Federal Reserve’s (Fed) recent 25 basis points (bps) interest rate hike will be the last one in the current tightening cycle. As a result, the appeal for risk-sensitive currencies has waned, favoring US equities.

Boosted by the encouraging economic data, the US Dollar Index (DXY) reached a fresh two-week high at 101.71, renewing expectations for another interest rate hike by the Fed in its September meeting. Fed Chair Jerome Powell emphasized that the decision on interest rates for September will depend on further economic data.

The strong expansion of GDP in the second quarter, robust demand for Durable Goods, and persistent tight labor market conditions indicate the possibility of the Fed considering further interest rate increases. The economy’s resilience also suggests that inflationary pressures may persist, warranting more interest rate adjustments.

The US Dollar Index is poised for further action as the core Personal Consumption Expenditure (PCE) Price Index for June is set to be released on Friday at 12:00 GMT.

Regarding the Swiss Franc, the Swiss National Bank (SNB) is likely to implement more interest rate adjustments as inflation is expected to gradually fall below 2% in due course.


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