The US dollar remains weak as a lack of new developments keeps low Federal Reserve interest rate expectations in place. Last week, the dollar fell after US CPI data matched expectations and initial jobless claims unexpectedly rose. The rise in jobless claims was due to fraudulent claims in Texas, indicating the labour market remains strong.<\/p>\n
The US dollar has largely stayed within a range, with the possibility that low rate expectations may have peaked. Rate cuts could stimulate economic activity, potentially altering future rate expectations and benefiting the dollar. However, currently, the trend favours a weaker dollar unless strong economic data suggests otherwise.<\/p>\n
For the Swiss franc, the Swiss National Bank has ended its easing cycle, and inflation remains below the 2% target. The franc’s performance depends on movements in other currencies, as the SNB is unlikely to adopt negative rates.<\/p>\n
In technical analysis, USDCHF dropped to around the 0.79 level where buyers may enter for a possible rise to 0.80. On the 4-hour chart, sellers maintain control after recent US reports. On the 1-hour chart, there’s a minor downward trendline suggesting bearish momentum with potential changes based on price movements.<\/p>\n
Upcoming data includes US Retail Sales, FOMC policy announcement, and US Jobless Claims.<\/p>\n
The US dollar is weak heading into the Federal Reserve’s meeting tomorrow, a view reinforced by today’s August retail sales report, which missed expectations by coming in at +0.2%. The market is now pricing in an over 85% probability that the Fed holds rates steady but signals cuts before the end of the year. This dovish sentiment keeps the pressure on the dollar for now.<\/p>\n
We believe the bearish stance on the dollar may be overstretched, creating a risk of a sharp reversal. Last week\u2019s spike in jobless claims was due to fraud, and the underlying 4-week average of claims is holding steady near a historically low 225,000, suggesting the labor market is not collapsing. If the Fed signals any hesitation about future cuts tomorrow, the dollar could rally strongly.<\/p>\n
On the other side of the pair, the Swiss franc has few domestic drivers. Switzerland’s latest inflation reading for August was 1.5%, well within the Swiss National Bank’s target, leaving them firmly on the sidelines. This makes the USDCHF pair almost a pure play on the upcoming Fed decision and the market’s reaction.<\/p>\n
For derivative traders, the USDCHF is sitting at a key support level around 0.7900. One could consider buying short-dated call options with a strike price near 0.8000 to position for a potential bounce if the Fed is less dovish than anticipated. The defined risk of an option is appealing given the uncertainty around tomorrow’s announcement.<\/p>\n
Conversely, if the Fed confirms the market’s dovish view, a break below the 0.7900 support could trigger further selling. In this scenario, buying put options would be a direct way to bet on a decline towards new lows not seen since the first half of 2024. Given that implied volatility is higher ahead of the event, using option spreads could be a more capital-efficient strategy to manage costs.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US dollar remains weak amid steady rate expectations; Swiss franc stable as SNB ends easing cycle.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30851","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/30851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=30851"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/30851\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=30851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=30851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=30851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}