- USD/CHF looks to overstep 0.9800 as expectations of a hawkish tone by the Fed bolstered.
- An aggressive tight policy stance will shrink liquidity and growth rate going forward.
- The Swiss CPI is seen at 2.5% against the prior print of 2.4%.
The USD/CHF pair is attempting to test the round level resistance of 0.9800 after failing to kiss the same in the last New York session. Broad-based strength in the US dollar index (DXY) is supporting the asset to resume rallying higher.
The asset has printed a fresh yearly high at 0.9800 on Tuesday ahead of the announcement of the monetary policy by the Federal Reserve (Fed). A serious transition from an ultra-loose stimulus era into a tight liquidity phase is strengthening all the greenback-dominated currencies. Tight monetary policy in the US economy will keep the greenback in the grip of bulls for a prolonged period. The Fed is highly expected to announce a rate hike by 50 basis points (bps), which will shrink liquidity and henceforth have a significant impact on the growth rate.
The DXY is oscillating in a narrow range of 103.44-103.51 in the early Tokyo session and has been displaying high volatility since Tuesday. Meanwhile, the 10-year US Treasury yields are moving higher to recapture the psychological resistance of 3%.
On the Swiss front, investors are eyeing the release of the Consumer Price Index (CPI), which is due on Thursday. A preliminary reading shows a tad improvement in the inflation figure at 2.5% against the prior print of 2.4%.
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