USD/CHF Extends Recovery on Hawkish Fed Expectations

The USD/CHF pair has been rising as hawkish Fed expectations and higher Treasury yields support the US Dollar. The Swiss National Bank's (SNB) decision to keep interest rates unchanged is also contributing to this trend, as subdued inflation in Switzerland reinforces expectations of no rate hike.

According to the CME FedWatch Tool, traders now see around a 65% probability of a rate hike at the September 15-16 meeting, following Chair Kevin Warsh's tough stance on inflation at the Jackson Hole Symposium. Meanwhile, Switzerland's August Consumer Price Index (CPI) data is due on Wednesday, with headline inflation expected to be flat on a monthly basis and the annual rate forecast to rise to 0.5% from 0.4%.

The technical analysis suggests that USD/CHF holds above the key moving averages, retaining a constructive bullish tone. The Relative Strength Index (RSI) near 54 indicates moderate upside momentum, while the Moving Average Convergence Divergence (MACD) has turned slightly positive, hinting at buying pressure rebuilding after a recent pullback.