USD/CHF Holds Firm as Market Reacts to Trump's Inauguration

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USD/CHF remains stable after significant volatility, trading around 0.9070 during the Asian session on Tuesday. The US Dollar experienced fluctuations following US President Donald Trump’s inauguration, but it faced downward pressure as he strengthened ties with Chinese President Xi Jinping. Trump's stance on the TikTok deal and a potentially softer approach to tariffs contributed to this shift.

The US Dollar gained ground after reports that Trump plans to have federal agencies reassess tariff policies and review trade relations with Canada, Mexico, and China.

The US Dollar Index (DXY), tracking the USD against six major currencies, hovers around 108.30 after trimming recent gains. The US Dollar is under pressure as the 2-year and 10-year US Treasury yields remain subdued at 4.23% and 4.54%, respectively.

According to the CME FedWatch tool, traders expect the US Federal Reserve (Fed) to keep borrowing rates between 4.25%-4.50% for the next three policy meetings, though inflationary concerns under Trump’s administration may limit the possibility of further rate cuts.

The Swiss Franc (CHF) remains weak as investors anticipate the Swiss National Bank (SNB) could continue lowering interest rates. With current rates at 0.5%, the SNB is focused on addressing inflation concerns below its target.

The typically safe-haven Swiss Franc may face headwinds as geopolitical tensions in the Middle East ease, particularly after a potential ceasefire and hostage release deal between Israel and Hamas.

 

 

 

Paraphrasing text from "FXSTREET"all rights reserved by the original author.