USD/CHF declines for fourth day as Swiss Franc gains, Fed rate cut expected

• USD/CHF falls for the fourth consecutive day, pressured by the strength of the Swiss Franc.
• SNB minutes showed the central bank dismissing a return to negative interest rates.
• The US Dollar declines ahead of the Federal Reserve's expected rate cut decision.

USD/CHF trades lower on Tuesday, around 0.7930 at the time of writing, down 0.27% for the day. The pair extends its four-day losing streak as the Swiss Franc (CHF) strengthens amid fading expectations of further monetary easing by the Swiss National Bank (SNB).

Minutes from the SNB's September meeting revealed that the institution no longer views deflation risks as significant and rules out a return to negative interest rates. The central bank emphasized that its policy stance remains accommodative, with the effects of previous measures still filtering through the Swiss economy.

Meanwhile, the US Dollar (USD) continues to weaken as markets anticipate a 25-basis-point rate cut from the Federal Reserve (Fed) on Wednesday, which would bring the target range down to 3.75%-4.00%. According to the CME FedWatch tool, there is a 97% chance of a rate cut in October and nearly a 95% chance of another reduction in December.

Political uncertainty in the United States (US) also weighs on the currency. The ongoing government shutdown has sparked debate within the Fed over whether to move quickly toward more accommodative policy, even as inflation remains above the 2% target.

However, US Dollar's downside could find some support as risk sentiment improves. Optimism surrounding US-China trade talks continues to grow, with both sides announcing a framework agreement on tariffs ahead of a meeting later this week between US President Donald Trump and Chinese President Xi Jinping.

Expectations for this meeting, combined with the prospect of easing trade tensions, could temporarily limit the Greenback's decline, even though the broader monetary outlook remains dovish.