USD/CHF recorded a slight increase above 0.9080 due to the Federal Reserve’s hawkish comments and the strength of the US dollar.

• USD/CHF traded with a slight positive bias around 0.9085 on Wednesday.
• The Fed’s comments by Kashkari dampened hopes of a possible interest rate cut this year, boosting the greenback.
• Uncertainty surrounding ceasefire talks between Israel and Hamas could push CHF higher and limit the pair’s upside.

The USD/CHF pair was slightly higher near 0.9085 in early European trading hours on Wednesday. The recovery in the U.S. dollar (USD) was supported by hawkish comments from Federal Reserve (Fed) officials, dampening expectations of a possible interest rate cut in 2024. Market participants will be watching the speeches of Federal Reserve Chairman Philip Jefferson and Susan Collins. , Lisa Cook later on Wednesday.

Minneapolis Federal Reserve President Neel Kashkari made some hawkish comments on Tuesday, which sent the greenback broadly higher. Kashkari said it was too early to declare inflation flat and noted that the Federal Reserve may cut interest rates this year if price pressures continue to ease.

Traders are lowering their bets on a Fed rate cut this year, with a 65.7% chance of a rate cut of at least 25 basis points in September, according to CME’s FedWatch Tool. Investors will get more clues from the first readings from the US University of Michigan Consumer Sentiment Index on Friday. The index is expected to ease to 76.0 in May from the previous reading of 77.2.

On the Swiss front, ceasefire talks between Israel and Hamas remain uncertain. Israel’s war cabinet has agreed to continue its military offensive against Hamas, with Israeli forces attacking the southernmost city in the Gaza Strip. Hamas agreed to a ceasefire plan on Monday, but Israel said the agreement did not meet its conditions, according to the New York Times. Rising geopolitical tensions in the Middle East could increase safe-haven flows and benefit the Swiss franc (CHF) against the US dollar.