USD/CHF finds bids from 0.9700, downside remains favored on weaker DXY

The USD/CHF pair has witnessed a minor pullback from the crucial support of 0.9700 after a sheer downside move. A lackluster bounce after a downside move of 3.60% from its recent high of 1.0058, recorded on Monday is posing a selling opportunity for the market participants.

Despite the rising hopes of an extremely tightening monetary policy by the Federal Reserve (Fed), the greenback bulls are failing to combat the Swiss franc. Philadelphia Fed Bank President Patrick Harker dictated that the Fed is expected to feature two 50 basis points (bps) interest rate hikes in June and July’s monetary policy meetings. Later, it will stick to a traditional quarter-to-a-percent rate hike to contain the price pressures.

This has bolstered the odds of a jumbo interest rate decision announcement by the Fed in June. Also, the statement claims that the FX domain will witness at least three 50 bps interest rate hikes by the end of 2022.

Meanwhile, the speech from the Swiss National Bank (SNB)’s Thomas J. Jordan has supported the Swiss franc bulls after prolonged weakness. SNB’s Jordan dictated in his speech that the Swiss franc (CHF) is a safe-haven asset and the SNB will continue with its prudent negative monetary policy to justify the inflation parameter. The targeted inflation figure at 2% is well maintained by the SNB and any temporary rise above the targeted figure will be offset quickly due to intervention of the SNB.