USD/CHF continued its gains for the second consecutive session, trading around 0.8060 during the Asian session on Tuesday (August 26th). The pair strengthened as the US dollar (USD) recovered its recent losses after US Federal Reserve (Fed) Governor Lisa Cook refused to resign following US President Donald Trump's announcement of her dismissal from the Fed's board of directors. Cook stated that she would not resign and would continue to serve.

The USD/CHF pair's upside is likely limited as the Swiss franc (CHF) may strengthen amid rising safe-haven demand, driven by growing concerns over the Fed's independence. Furthermore, the US dollar may face challenges as market participants anticipate that the dismissal of Fed Governor Cook could increase the likelihood of an early interest rate cut, given Trump's continued pressure on the central bank to reduce borrowing costs.

Furthermore, Fed Chairman Jerome Powell stated at the Jackson Hole symposium last week that risks to the labor market were increasing, but also noted that inflation remained a threat and that a decision was not final. Traders will likely await the release of US Q2 Annual Gross Domestic Product (GDP) data and the July Personal Consumption Expenditures Price Index, the Fed's preferred inflation measure.

Swiss employment rose 0.6% year-on-year to 5.532 million in the second quarter, matching the previous period's pace, while inflation remained below the Swiss National Bank's (SNB) 2% target, reinforcing expectations of further interest rate cuts, potentially returning to negative territory.

Furthermore, the newly imposed 39% US tariffs on Swiss imports will weigh heavily on Switzerland's export-driven economy and could increase pressure on the Swiss National Bank (SNB) to ease policy further. However, the Swiss government announced last week that it would intensify efforts to improve the country's attractiveness as a business hub, including measures such as easing regulatory burdens and postponing costly new rules. (alg)

Source: FXstreet