USD/CHF eyes downside below 0.9150 as hopes for a stable Fed policy soar

The USD/CHF pair looks vulnerable above the immediate cushion of 0.9150 in the Asian session. The Swiss franc asset is expected to break down the aforementioned support as odds for an unchanged monetary policy by the Federal Reserve (Fed) are advancing.

S&P500 futures have extended their gains after a positive Monday on hopes that the United States banking system will get to the road of recovery sooner and the Fed won’t be heavy on interest rates from now, portraying positive market sentiment.

The demand for US government bonds remained extremely weak as investors channelize their funds into other assets. Safe-haven appeal for US government bonds eased dramatically as US authorities are making efforts to bail out the vulnerable banking system. Reuters reported that First Citizens BancShares said it would take on the deposits and loans of failed Silicon Valley Bank (SVB). On weekend, the US government planned to stretch its emergency lending facility for small banks as households rushed for their deposits while borrowings soared.

Meanwhile, the US Dollar Index (DXY) has gradually corrected to near 102.83 as investors’ domain is advocating an unchanged monetary policy by the Federal Reserve (Fed) ahead. The street is anticipating that tight credit conditions by US banks are sufficient to bring down inflation further. And further policy tightening could harm the economy.

On the Swiss front, expectations for a tight monetary policy by the Swiss National Bank (SNB) could keep the Swiss franc solid. SNB Chairman Thomas J. Jordan confirmed that the central bank won’t hesitate in hiking rates further if inflation continues to remain persistent.

Going forward, Swiss ZEW Survey-Expectations (March) data will remain in focus. As per the consensus, the economic data would decline heavily to -18.9 from the former release of -12.3. It seems that the demise of Credit Suisse has dented the sentiment of firms.