In the early New York session, the USD/CHF pair aims to establish stability above the significant resistance level of 0.8600. The Swiss Franc has gained strength, benefiting from the US Dollar Index (DXY) reaching a new daily high after finding support below the psychological resistance of 100.00.

Following cues from overnight futures, the S&P500 is expected to open on a subdued note. The US equities market remains uncertain, with further movement dependent on the ongoing second-quarter earnings season. Market participants are exercising caution due to the prevailing ambiguity.

The US Dollar Index has reached its highest point of the day, hovering around 100.00. This surge can be attributed to oversold signals from momentum oscillators, as the fundamental factors remain unsupportive. In response to the USD’s movement, the ten-year US Treasury yields have also rebounded, approaching 3.81%.

Given the significant drop in inflation and the relatively less tight labor market, the prevailing expectation is that the Federal Reserve (Fed) will implement only one more interest rate hike by the end of the year. However, some Fed policymakers are not yet convinced of this approach.

Fed Governor Christopher Waller recently commented that two more interest rate hikes are still appropriate before the year concludes. Additionally, Chicago Fed Bank’s Austan Goolsbee acknowledged a gradual decline in inflation but stressed the need for further action.

Although inflation in Switzerland has remained below 2%, there are high expectations for additional interest rate hikes by the Swiss National Bank (SNB). SNB Chairman Thomas J. Jordan aims to maintain inflation steadily below 2% and is likely to raise interest rates further in September.


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