USD/CHF rebounds slightly from 0.9720, Fed’s policy dents greenback, Swiss Inflation eyed

The USD/CHF pair has displayed an intense sell-off after failing to sustain above the resistance of 0.9840 as the rate hike announcement by the Federal Reserve (Fed) underpinned the positive market sentiment. The asset has plunged to near 0.9720 but is witnessing a minor pullback as profit-booking kicks in.

Potential selling pressure came after the Federal Reserve (Fed) dictated a rate hike by 50 basis points (bps) and its strategic planning to curb the inflation mess. The Fed has announced that the balance sheet reduction program will be initiated to tame the galloping inflation along with more jumbo rate hikes in the next policy meetings.

Inflation is skyrocketing and a restrictive policy is highly required for a prolonged period but what favors is the solid US economy that can absorb the shocks of price pressures. Also, the announcement that has delighted the market participants is the gradual approach to tightening the policy. The Fed has eliminated the hopes of a 75 bps rate hike by stating that the option is not into consideration.

On the Swiss front, the focus is on the release of the Consumer Price Index (CPI), which is due in the European session. The yearly Swiss CPI is seen at 2.5% against the prior print of 2.4%. Inflation in the Swiss area is advancing modestly but does not favor any hopes of a hawkish stance from the Swiss National Bank (SNB). Apart from that, Swiss agencies will also report the Unemployment Rate, which is expected to land at 2.2%, similar to its previous print.