USD/CHF finds offers around 0.9740 as DXY steadies, investors await Fed’s policy

• A failed attempt to breach 0.9740 has brought some offers to the asset.
• The DXY is expected to skid below 103.00 amid signs of exhaustion on higher levels.
• The Swiss inflation is seen higher at 2.5% against the earlier figure of 2.4%.

The USD/CHF pair is struggling to breach 0.9740 as the US dollar index (DXY) is displaying lackluster performance in the Asian session. As investors are waiting for the interest rate announcement by the Federal Reserve (Fed), which is due on Wednesday and has already recorded a fresh 19-year high at 103.93 by the DXY, a sense of exhaustion has been witnessed at the elevated levels. Therefore, investors should brace for a higher uncertainty in the DXY and eventually in the greenback-denominated FX pairs.

Fed chair Jerome Powell, on Wednesday, is likely to feature a 50 basis point (bps) interest rate hike. To tame the untamed inflation, Fed is going to shrink liquidity from the economy vigorously. Apart from the interest rate decision, the dictation of the roadmap for further hawkish guidance will remain in the spotlight. More than one 50 bps interest rate hike is the talk of the town this year and the Fed will lighten up its balance sheet quickly to squeeze the liquidity to fix the inflation mess.

On the Swiss front, the Swiss Federal Statistical Office will release the Consumer Price Index (CPI) on Thursday. A preliminary reading shows yearly CPI at 2.5% against the prior print of 2.4%. The Swiss inflation is gradually inching higher above the targeted print of 2%. Therefore, a slightly hawkish tone from the Swiss National Bank (SNB) further cannot be ruled out.