USD/CHF looks to build momentum beyond 0.8200 ahead of SNB rate decision

USD/CHF attracts buyers for the fifth straight day amid a broadly firmer USD.
The Fed’s hawkish pause on Wednesday lifted the USD to over a one-week top.
Bets for more aggressive rate cuts by the SNB continue to weigh on the CHF.

Haresh Menghani FXStreet

The USD/CHF pair builds on its recent recovery from the vicinity of mid-0.8000s, or a nearly two-month low touched last week, and scales higher for the fifth straight day on Thursday. The momentum lifts spot prices to over a one-week high during the Asian session, with bulls awaiting a sustained move beyond the 0.8200 mark ahead of the key central bank event risk.

The Swiss National Bank (SNB) will announce its policy decision later today and is widely expected to lower interest rates by 25 basis points (bps) to zero. Moreover, investors seem convinced that the central bank would not shy away from bringing negative interest rates this year amid heightened uncertainty around the erratic US tariff policy. This is seen as a key factor behind the Swiss Franc's (CHF) relative underperformance and acts as a tailwind for the USD/CHF pair amid some follow-through US Dollar (USD) buying.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, advances to its highest level in over a week in the wake of the Federal Reserve's (Fed) hawkish pause on Wednesday. In the so-called dot plot, the committee projected two rate cuts by the end of 2025, though policymakers see only one 25-basis points rate cut in each of 2026 and 2027. This, in turn, offers additional support to the USD/CHF pair. However, rising geopolitical tensions could limit deeper losses for the safe-haven CHF.

As the Israel-Iran conflict enters its seventh day, reports suggest that US officials are preparing for a possible Iran strike this coming weekend. The Israel Defense Forces (IDF) warned residents of the cities of Arak and Khondab in central Iran to evacuate for their safety as it is operating in the area against Iranian military infrastructure. This raises the risk of an all-out war in the Middle East, which, along with persistent trade-related uncertainties, continues to weigh on investors' sentiment and triggers the global flight to safety.

Economic Indicator

SNB Interest Rate Decision

The Swiss National Bank (SNB) announces its interest rate decision after each of the Bank’s four scheduled annual meetings, one per quarter. Generally, if the SNB is hawkish about the inflation outlook of the economy and raises interest rates, it is bullish for the Swiss Franc (CHF). Likewise, if the SNB has a dovish view on the economy and keeps interest rates unchanged, or cuts them, it is usually bearish for CHF.

EUR/USD looks to regain the 200-day SMA

EUR/USD regains some balance and trade just above 1.1600 the figure ahead of the opening bell in Asia. The pair initially dipped to the 1.1530 zone for the first time since November, always following the stronger US Dollar and the marked flight-to-safety in the context of the ongoing Middle East crisis

GBP/USD slips below key averages as geopolitical risks mount

GBP/USD fell about 0.35% on Tuesday, settling around 1.3350 after slipping below the 200-day Exponential Moving Average for the first time since early December. The pair has pulled back sharply from its late-January high near 1.3870, shedding over 500 pips in a series of lower highs and lower lows.

Gold moves closer to $5,150 amid sustained safe-haven flows

Gold climbs back above $5,100 during the Asian session on Wednesday, moving away from an over one-week low, touched the previous day. Sustained safe-haven flow, amid escalating geopolitical tensions in the Middle East, acts as a tailwind for the bullion. However, a bullish US Dollar and reduced bets for more aggressive easing by the US Fed might keep a lid on the non-yielding yellow metal ahead of the US ADP report and ISM Services PMI later today.