USD/CHF finds support above 0.8150 and holds weekly gains

• The US Dollar remains steady at the upper range of the 0.8100s, on track to a 0.7% weekly recovery..
• The SNB cut rates to 0% on Thursday and is likely to introduce negative rates before the end of the year.
• Fed Powell struck a hawkish note on Wednesday and provided support to the US Dollar.
  

The US Dollar was rejected on Thursday at 0.8715, but downside attempts have remained capped above 0.8450 on Friday, which leaves the pair on track to close the week with a 0.7% advance.

The Swiss Franc lost ground during the week as the market anticipated that the Swiss National Bank would cut rates by 25 basis points on Thursday, bringing its benchmark interest rate to 0%, as it finally was the case.

SNB-Fed monetary divergence may weigh on the CHF

The Swiss Franc trimmed losses on Thursday with traders closing positions in a clear "buy the rumour, sell the news" case, but downside attempts have remained limited. Market sources suggest that the Swiss will be the first major central bank to introduce negative rates, pressured by a deflationary economy, which is likely to act as a headwind for the CHF.

The Federal Reserve, on the other hand, delivered a substantially more hawkish message, which has provided additional support to the US Dollar.

The Fed kept its benchmark rates on Wednesday and maintained its projections of two rate cuts in 2025, but Chairman Powell dismissed those estimations, citing higher inflationary pressures stemming from Trump's tariffs and cast doubt about the  September rate hike investors were hoping for.