USD/CHF continued its strengthening for the second consecutive session, trading around 0.8060 during the European session on Tuesday (July 29). The currency pair strengthened as the US dollar (USD) was supported by trade optimism, driven by recent trade developments between the United States (US) and its trading partners.

The United States and the European Union (EU) reached a finalized trade deal on Sunday, setting a 15% tariff on most European goods, which will take effect on August 1. Furthermore, market sentiment improved due to expectations that the US and China would extend the fragile trade truce for another three months before the August 12 deadline.

US President Donald Trump also announced in a social media post on Monday that he would resume trade negotiations with Cambodia and Thailand after the two countries ended a five-day standoff along their disputed border.

The US dollar also has the potential to strengthen as the US Federal Reserve (Fed) is expected to maintain its benchmark interest rate between 4.25% and 4.50% on Wednesday. The Federal Open Market Committee (FOMC) press conference will be closely watched for signs that rate cuts will begin in September. Market participants will likely be watching upcoming data this week, including the Q2 Personal Consumption Expenditures (PCE) inflation report and July's Nonfarm Payrolls, for further insight into the health of the US economy.

The USD/CHF pair found support as the safe-haven Swiss Franc (CHF) weakened on market optimism over a trade deal between the United States (US) and its major partners. However, the CHF's decline may be restrained as traders expect the Swiss National Bank (SNB) to delay further monetary policy easing following the latest Swiss inflation report for June. (alg)

Source: FXstreet