Skip to content USDCHF Fundamental Analysis – 27-June-2024
The Swiss franc dropped almost 0.5% to near 0.896 per USD after the Swiss National Bank cut the key interest rate by 25 basis points for the second time. Most investors anticipated this move. The bank cited decreasing inflation pressures while trying to keep suitable monetary conditions.
Franc Soars on European Political Turmoil
In May, Switzerland’s inflation rate stayed at 1.4%. Before this decision, the franc traded near a three-month high against the dollar and a four-month high against the euro. This strength was due to political unrest in France and the rise of far-right parties in the European Parliament elections, leading investors to seek safer assets.
USDCHF Fundamental Analysis – 27-June-2024
The USD/CHF pair reflects the relative strength of the US dollar against the Swiss franc, with several key factors influencing its performance. Recently, the Swiss franc weakened due to a 25 basis point cut in the Swiss National Bank’s key interest rate. This move, expected by many investors, addressed the declining inflationary pressures in Switzerland, which held steady at 1.4% in May.
In contrast, the US dollar has shown resilience amid varying economic data and global market trends. Political instability in Europe, particularly in France, and the rise of far-right parties in the European Parliament have driven investors towards the US dollar, which is considered a safer asset. This situation has strengthened the USD against the franc, pushing the USD/CHF pair higher.
Additionally, the economic policies and interest rate decisions of the Federal Reserve and the Swiss National Bank will continue to play significant roles. If the Federal Reserve maintains or increases interest rates while the Swiss National Bank keeps rates low, the USD/CHF could see further upward momentum. Conversely, any shifts in US economic stability or significant policy changes could impact this trend.
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