Swiss Franc Softens as Dollar Recovers Ahead of Fed Minutes

Key Moments

Dollar Regains Footing, Pressuring the Swiss Franc

The Swiss Franc (CHF) is marginally weaker against the US Dollar (USD) in early European trade on Tuesday, with USD/CHF edging higher toward 0.8116. The pair is gaining as the Greenback rebounds, helped by worries that climbing oil prices could revive expectations for a more hawkish stance from the Federal Reserve (Fed).

The US Dollar Index (DXY) – which tracks the currency against six major peers – trades slightly higher near 99.65 at press time. This follows a recovery on Monday after the index had fallen to a new two-month low at 99.29.

WTI crude oil has advanced to a fresh two-week peak near $84.50 after United States (US) President Donald Trump confirmed there would be no renewal of the US-Iran ceasefire. The move in energy prices is adding another layer of uncertainty for the Fed’s inflation outlook and policy path.

Over recent weeks, traders have reduced their expectations for additional Fed rate hikes in response to softer US economic data for July, which had encouraged a more cautious policy view.

Fed Expectations Cool as HSBC Flags Rising Risk of September Pause

Analysts at HSBC Asset Management note a significant pullback in market pricing for near-term tightening. They highlight that “market pricing for a September Federal Reserve rate hike has fallen to its lowest level since mid-June,” as investors reassess the policy outlook. They point out that expectations have been pushed lower, “wedged between Warsh’s comments and the benign CPI print,” while “a softer labour report has also weighed on rate expectations.” HSBC further comments that “if August inflation and employment data show more of the same, the Fed is likely to stay on hold in September,” emphasizing the importance of incoming US data for the near-term rate trajectory.

Looking ahead, investors will closely monitor the minutes from the US Federal Open Market Committee (FOMC) July policy meeting, due for release on Wednesday. The document will be scrutinized for any signals on how policymakers are weighing softer data against lingering inflation risks and the implications for the timing of future moves.

For the Swiss Franc, price action is expected to be driven primarily by geopolitical developments, as Switzerland’s economic calendar offers little in the way of domestic catalysts this week.

USD/CHF Technical Picture: Modest Bullish Bias on Daily Chart

On the daily timeframe, USD/CHF is trading around 0.8115, holding slightly above the 20-day exponential moving average (EMA) at 0.8111. This positioning imparts a mild bullish tone in the short term.

The Relative Strength Index (RSI) stands at 51.89, just above the neutral 50 threshold, pointing to moderate upside momentum as the pair consolidates after its recent rebound from the 0.8050 region.

On the downside, the initial support lies at the 20-day EMA at 0.8111. A daily close below this level would indicate weakening bullish pressure and open the door to a deeper retracement toward recent lows. As long as the pair remains above this moving average, dips are likely to attract buyers, preserving a constructive short-term outlook while market participants wait for a more decisive momentum shift to extend the advance.