USD/CHF declines ahead of Fed decision

The USD/CHF declined by 0.28% on the day to 0.8937. US yields and the DXY index are declining. All eyes are on the Fed’s decision and the updated dot plots. On Wednesday, the USD/CHF lost some ground and declined to the 0.8950 area.

The US 10-year yield, after hitting its highest level since 2007 at 4.36%, is consolidating at 4.32%. The 2 and 5-year yields are also backing down, retreating to 5.06% and 4.47%, respectively, while the US DXY index fell below 105.00 to 104.85, seeing 0.30% losses.

Regarding the Fed decision later in the session, markets widely anticipate that the bank will hold rates steady at the 5.25%-5.50% range. However, the Fed have all the reasons to remain hawkish due to rising Oil prices and the solid economic activity seen in the US, which could exacerbate inflationary pressures.

In addition, investors will closely monitor the updated dot plots, which in the June meeting, the median rates were revised upwards to 5.6% from 5.1% in March, as they will provide clearer guidance on the next decisions. Chair Powell’s stance will also be important for markets.

According to the daily chart, the technical outlook for USD/CHF leans neutral to bearish as signs of bullish exhaustion emerge.