USD/CHF looks to settle around 0.9400 despite uncertainty over Fed's interest rate policy

The USD/CHF has opened above the value are high of the Friday’s session and has moved above Friday’s high 0.9350 as investors have started incorporating the impact of a tightening policy from the Federal Reserve (Fed) in its monetary policy meeting on Wednesday.

The investing arena is waiting so long for the announcement of monetary policy by the Fed’s Chair Jerome Powell. The latter in his testimony announced a much likely 25 basis points (bps) interest rate hike in the coming policy announcement. However, the recent print of the US Consumer Price Index (CPI) at 7.9% is not yet inculcated into the mathematics behind the interest rate derivation. Moreover, the US CPI print of 7.9% is untouched with the galloping commodity prices such as oil, food products and metals etc. Therefore, it would be better to stay aside the Powell testimony’s much dictated slogan of a 25 bps interest rate hike and brace an aggressive hawkish stance from the Powell and its colleagues.

Meanwhile, the US dollar index (DXY) is hovering around 99.00 as investors await an impulse move in the sentiment of the market. The headlines from the Russia-Ukraine war on the weekend were not any material that could dictate the price action. Therefore, investors are more focused to the monetary policy puzzle from the Fed.

Although impetus from the Russia-Ukraine war and Fed policy announcement hold principal importance but Retail Sales from US on Wednesday will also keep the investors busy.