USD/CHF returns above 0.7970 with all eyes on the Fed

• The US Dollar retraces previous days' losses against the Swiss Franc and returns to 0.7970.
• The pair remains trading within the last two weeks' range, with rallies capped below 0.7985.
• Investors are bidding their time, awaiting the Federal Reserve's decision.

The US Dollar is trading firm against a weak Swiss Franc on Wednesday. The pair has reached session highs right above 0.7979 during the European trading session, after bouncing from 0.7925 lows earlier on the day, retracing the losses from the previous two days.

From a wider perspective, however, the pair remains moving within the last two weeks' trading range, with upside attempts capped below 0.7985, as investors bid their time, awaiting the outcome of the Federal Reserve's (Fed) monetary policy meeting, due later today.

Investors await a Fed rate cut

Futures markets are practically fully pricing a 25 basis points rate cut, which would leave the Federal Funds rate at s three-year low in the 3.75%-4.0% range. Investors will also be looking for some validation of their bets on further rate cuts in December. In this sense, the risk is that a hawkish press release by Fed Chairman Jerome Powell might send the US Dollar rallying.

Beyond that, there is growing speculation that the central bank might signal the closure of its balance sheet reduction programme, the so-called quantitative tightening, to support commercial banks amid signs that credit conditions are deteriorating.

Apart from that, the US President's tour through Asia has been contributing to support a moderate risk appetite ahead of the key meeting with Chinese President Xi Jinping on Thursday. Comments from Trump have been positive so far, although the Chinese Foreign Ministry comments urging the US to take actions to keep supply chains stable have soured the market mood somewhat.

In Switzerland, the ZEW economic expectations survey, released earlier on Wednesday, has shown an improvement to a reading of -7.7 in October, from the -46.4 reading seen in September.