The USD/CHF pair trades on a weaker note near 0.8905 during the early European session on Wednesday. The weakness of the pair is supported by the prospect of US Federal Reserve (Fed) rate cuts this year, which drag the Greenback lower across the board. Traders await the preliminary US July S&P Global Purchasing Managers Index (PMI) for fresh impetus.  

The rising bets that the Fed would start easing its monetary policy in September appear to cap the Greenback’s upside. The markets expect two or potentially three rate cuts this year. According to the CME FedWatch Tool, traders have priced in almost a 96% chance of a Fed rate cut in September this year. 

However, these odds might be changed with key US economic data later this week. Investors expect to see an improvement in the US manufacturing sector, and the stronger-than-expected US PMI might cap the downside for USD/CHF. The US Gross Domestic Product (GDP) for the second quarter will be released on Thursday, followed by Personal Consumption Expenditures Price Index (PCE) data for June on Friday. 

Data released on Tuesday from the US docket showed that the Existing Home Sales declined by 5.4% MoM in June from 4.11M to 3.89M, below the market consensus. Meanwhile, the Richmond Fed Manufacturing Index arrived at -17 in July versus -10 prior. 

The expectation that the Swiss National Bank (SNB) might further cut interest rates in September has weighed on the Swiss Franc (CHF) in the previous sessions. FX markets analyst at Ballinger Group, Kyle Chapman, said that the SNB is expected to cut a third rate next quarter and potentially decide a fourth cut in December. Additionally, the political uncertainty in the United States contributes to volatility in the US Dollar (USD) and boosts safe-haven assets like the CHF.More By This Author:USD/CAD Extends Upside Above 1.3750, With All Eyes On BoC Rate Decision Silver Price Forecast: XAG/USD Extends Decline Near $29.00 Amid China’s Demand Concerns GBP/JPY Price Analysis: The Crucial Support Level Emerges Near 202.00