USDCHF today experienced a sharp decline and is approaching the 0.8840 level at the start of the European session. The Swiss Franc is expected to face further pressure due to the relatively optimistic market sentiment and the significant weakness of the US Dollar Index (DXY).

S&P500 futures have fluctuated after a bullish trading session, awaiting a new catalyst for the next move. Investors are awaiting the Federal Reserve's decision, which will be announced this month. The 10-year US Treasury yields have fallen below 4.0%.

This week, the main trigger for the US Dollar Index will be the CPI data, which will be released on Wednesday at 12:30 GMT. According to initial reports, the monthly consumer price index is expected to increase by 0.3% compared to the previous figure of 0.1%. Additionally, core inflation, excluding food and energy prices, is expected to align with the main CPI figure.

Meanwhile, the annual inflation measured by the core CPI is expected to slow down to 3.1% compared to the previous release of 4.0%, while core inflation is expected to weaken to 5.0% compared to 5.3% in May during the same period.

In addition to US inflation data, investors will be paying attention to the Federal Reserve's Beige Book report, which is expected to provide insights into current economic conditions and prospects.

Although there are no significant economic events in Switzerland, investor attention will remain focused on the US Dollar. However, regarding the Swiss National Bank (SNB) interest rate policy, analysts at MUFG believe that a 25 bps rate hike in September seems more likely at this stage.

If there is another rate hike and core inflation remains at the current level (1.9%) or lower, the SNB's policy interest rate will be in positive real territory, joining the Reserve Bank of New Zealand (RBNZ), Federal Reserve (Fed), and Bank of Canada (BoC).

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Warning!

This analysis is based on fundamental and technical perspectives from reliable sources, and it is not intended as advice or an invitation to act. Always remember that this content aims to enrich the reader's information. Always conduct independent research regarding other forex information to serve as a reference for your trading decisions.

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