USD/CHF Extends Five-Day Winning Streak on Fed Rate Hike Expectations

The USD/CHF exchange rate continues its upward momentum for a fifth consecutive day, supported by expectations of a Federal Reserve rate hike. The US Dollar Index (DXY) is trading around 99.60, up 0.11% on the day and near a two-week high.

Markets are largely pricing in a 25-basis-point rate increase, which would be the first since 2023. Elevated oil prices due to the Middle East conflict are adding to inflationary pressures, lifting US Treasury yields and supporting expectations of higher borrowing costs.

The Swiss Franc (CHF) remains vulnerable to further losses, as Switzerland's low-inflation environment has allowed the SNB to keep its policy rate at 0%. This wide interest rate differential encourages investors to use the CHF as a funding currency, driving flows towards higher-yielding currencies like the US Dollar.

From a technical analysis perspective, USD/CHF maintains a bullish bias, holding above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs). The Relative Strength Index (RSI) at about 64 and a positive, rising MACD line suggest firming upside momentum.