Swiss Franc edges lower as US Dollar rebounds, FOMC minutes in focus

The Swiss Franc (CHF) experienced a slight decline against the US Dollar (USD) during the initial European trading session on Tuesday, with the USD/CHF pair reaching close to 0.8116. This dip accompanied the US Dollar's rebound, driven by concerns that rising oil prices might reignite hawkish Federal Reserve (Fed) interest rate expectations.

At the time of reporting, the US Dollar Index (DXY), which measures the Greenback's value against six major currencies, traded near 99.65, indicating a marginal increase from its previous level of 99.29. WTI Oil prices surged to a fresh two-week high of around $84.50 following U.S. President Donald Trump's confirmation of the termination of the US-Iran ceasefire.

In recent weeks, traders had reduced their expectations for Federal Reserve rate hikes due to sluggish U.S. economic data from July. HSBC Asset Management analysts pointed out that market predictions for a September Federal Reserve rate hike have hit their lowest point since mid-June, as investors reevaluate the policy outlook. They noted that expectations were squeezed between Warren's remarks and the mild Consumer Price Index (CPI) print, while a more favorable labor report also dampened rate expectations.

If August inflation and employment data continue to be disappointing, the Fed is likely to maintain its stance in September, highlighting the significance of forthcoming U.S. data in determining the near-term rate path. Traders will pay close attention to the U.S. Federal Open Market Committee (FOMC) minutes of the July policy meeting, set to be released on Wednesday.

The price action in the Swiss Franc is anticipated to be influenced by geopolitical developments, as Switzerland's economic calendar offers limited news this week. On the daily chart, USD/CHF is trading at 0.8115, slightly above the 20-day exponential moving average (EMA) at 0.8111, suggesting a mild bullish bias in the near term.

The Relative Strength Index (RSI) stands at 51.89, just above the neutral 50 line, indicating steady but unremarkable upside momentum as the pair consolidates after its recent recovery from the 0.8050 area. Immediate support for USD/CHF is located at the 20-day EMA at 0.8111, with a breach below this level suggesting fading bullish pressure and a further decline towards recent lows.

As long as the pair remains above the moving average, dip-buying interest is expected to persist, maintaining a constructive short-term structure while traders monitor for a stronger momentum shift to boost gains.