The USD/CHF currency pair has recouped part of the steep losses that brought it to a 14 1/2-year low of 0.7601 earlier on Wednesday.
US President Donald Trump’s erratic approach to trade, international relations as well as fiscal and monetary policy since the beginning of his second term last year has prompted some investors to limit exposure to the US Dollar. This has pushed the greenback to fresh lows.
At the same time, the Swiss Franc has strengthened versus major peers, as investors have been reassessing traditional safe havens.
As confidence in the US Dollar and the Japanese Yen as safe-harbor assets weakens, traders seemed to have shifted toward the Franc. As a result, the major currency pair has lost about 15% over the past 12 months.
Market participants now set their focus on the outcome of the Federal Reserve’s two-day policy meeting. The Fed is widely expected to keep its federal funds rate target range intact at 3.50%-3.75%.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell.
The minutes from the Fed’s December policy meeting showed that officials judged rate cuts were likely to be appropriate in 2026 in case inflation subsides over time.
Yet, policy makers were divided in their assessment of risks between higher inflation and unemployment. Some FOMC members expressed greater concern that inflation becoming entrenched could require higher interest rates. Other policy makers favored a greater magnitude of rate cuts to rein in signs of a softening labor market.
The FOMC signaled just one 25 bps rate cut for this year, while investors continue to expect at least two rate cuts.
The USD/CHF currency pair was last up 0.85% on the day to trade at 0.7672.
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