Insights 
VT 
The US Dollar has recovered from recent losses against the Swiss Franc, reaching 0.7970, trading within a defined range with resistance at 0.7985. The market anticipates the Federal Reserve’s decision, with a 25 basis points rate cut expected, potentially lowering the Federal Funds rate to a range between 3.75% and 4.0%.
In addition, there’s speculation about the Fed pausing its quantitative tightening to support banks amid concerns over credit conditions. The US President’s Asia tour may influence risk appetite ahead of a meeting with China’s President. In Switzerland, the ZEW economic expectations survey improved to -7.7 in October from -46.4 in September.
Federal Reserve Monetary Policy
The Federal Reserve’s monetary policy involves adjusting interest rates to control inflation and employment, impacting the US Dollar’s strength. The Fed meets eight times yearly to assess economic conditions, and quantitative easing and tightening can respectively weaken or strengthen the Dollar. The upcoming Fed meeting, especially any statements from Chairman Jerome Powell, will likely affect the Dollar’s trajectory and broader market trends.
As of today, October 29th, 2025, the market is holding its breath for the Federal Reserve’s decision. The USD/CHF pair is stuck in a narrow range around 0.7970, showing that nobody is making big moves before the announcement. This price action suggests that the expected rate cut is already priced into the market.
We see that futures markets are showing an over 95% probability of a 25 basis point rate cut today, which would be the third such cut this year. This expectation has been solidifying since September’s inflation figures came in slightly below forecast at 2.8%. The real trade is not on the cut itself, but on what Fed Chair Jerome Powell signals for December and beyond.
Forward Guidance and Market Reactions
Given the high uncertainty around forward guidance, options volatility is elevated. This presents an opportunity for traders who believe the market’s reaction will be less dramatic than currently priced. Looking at strategies like short straddles on currency pairs could be effective if Powell delivers a balanced, neutral message.
We must remember the Fed’s aggressive hiking cycle that peaked in 2023, which has now clearly shifted into an easing phase. The key question is the pace of these cuts, which will be dictated by incoming labor and inflation data. Any hint that the Fed might pause cuts would be a hawkish surprise and could send the dollar higher.
The primary risk for the next few weeks is a hawkish pivot from Powell, pushing back against market expectations for another cut in December. We are watching the VIX, currently trading near 16, for any spike above 20, which would signal a rapid shift in market sentiment. Traders should consider protective puts on major indices or calls on the dollar to hedge this risk.
Beyond the interest rate, we are focused on any commentary about the balance sheet reduction program, or quantitative tightening. Signs that the Fed may end QT sooner than expected would be a significant dovish signal. This could weaken the dollar but provide a strong tailwind for assets like Gold, which is already trading above $4,000 an ounce.
