• The pair declines for a second straight session, weighed down by persistent US Dollar weakness.
• US data released on Tuesday strengthens expectations of a Federal Reserve rate cut in December.
• Diverging monetary policy paths between the Fed and the Swiss National Bank support further downside potential for the pair.

USD/CHF trades lower on Wednesday, around 0.8060 at the time of writing, down 0.10% on the day. The pair extends the correction initiated after reaching its near three-week high just above 0.8100, pressured by a broader bearish tone surrounding the US Dollar (USD).

The move is driven by shifting monetary policy expectations following Tuesday’s US data, which reinforced the likelihood of Federal Reserve (Fed) easing in December. The Producer Price Index signaled cooling inflationary pressures, while Retail Sales rose less than expected and the Consumer Confidence Index dropped sharply, all pointing to a slowing labor market and giving the Fed more room to lower rates.

Recent comments from Fed officials have echoed this scenario, with several policymakers explicitly suggesting that another quarter-point rate cut remains possible at the December meeting. Markets now price in roughly an 85% chance of a Fed rate cut in December, weighing on the US Dollar.

In contrast, the Swiss National Bank (SNB) is broadly expected to maintain its policy rate at 0.00% over the long term, potentially through 2027, according to analysts. This policy divergence continues to work against the greenback and supports the prospect of additional downside for USD/CHF.

Market participants will now focus on the delayed Durable Goods Orders data and the Jobless Claims report, which could provide renewed impetus for the Dollar if surprises emerge. Meanwhile, improving sentiment linked to diplomatic progress involving the United States, Ukraine and Russia is also reducing safe-haven demand for the Franc, limiting downward pressure on USD/CHF.