USD/CHF gathers strength above 0.9100 amid hawkish Fed remarks

The USD/CHF pair trades on a positive note on Monday during the early European session. The uptick of the pair is supported by the lower bets on rate cut expectations from the Federal Reserve (Fed), with traders seeing just one or two rate cuts happening this year. The preliminary US Gross Domestic Product Annualized for the first quarter (Q1) and the Personal Consumption Expenditures (PCE) Price Index will be the highlights for this week.

With a robust US economy and stickier-than-expected inflation, investors dial back interest rate cut expectations. Several Fed officials prefer to wait longer than previously expected to cut rates following a series of surprisingly high inflation readings. The high-for-longer US rate narrative lifts the Greenback and acts as a tailwind for the USD/CHF pair. 

On Friday, Chicago Federal Reserve (Fed) President Austan Goolsbee hinted at a longer timeline for interest rate cuts as progress on inflation had “stalled”, adding inflation has significantly dropped from its pandemic-era peak of 9.1%, but remains stubbornly above the Fed’s target. Meanwhile, Atlanta Fed President Raphael Bostic noted that the US central bank wouldn’t cut rates until the end of the year.

On the Swiss front, Swiss National Bank (SNB) Chairman Thomas Jordan said on Saturday that monetary policy should remain focused on price stability. He said that economic growth and productivity are too low and many countries are running too much debt and excessive deficits. Apart from this, the escalating geopolitical tensions in the Middle East, particularly Israel and Iran, might boost safe-haven assets like Swiss France and cap the pair’s upside.