Traders adopt a cautious stance as the Federal Reserve prepares to announce its monetary policy, with markets pricing a 30% chance of a rate hike.
The Swiss Franc steadies against the US Dollar, with USD/CHF trading flat at 0.8184 after retreating from an intraday high of 0.8205. The Greenback weakens as oil prices pull back, easing inflation concerns and dragging US Treasury yields lower.
The US Dollar Index (DXY) trades at 101.35, down from a one-month high of 101.64. US consumer confidence fell to 90.8 in July from an upwardly revised 92.2 in June, offering little support to the currency. The Fed is expected to hold rates at 3.50%-3.75%, though markets see a 30% chance of a 25-basis-point hike.
Despite a pullback in oil prices, inflation remains above the Fed’s 2% target, keeping upside risks in focus. Policymakers are likely to maintain a hawkish tone even if rates stay unchanged.