USD/CHF Appears Vulnerable Above 0.8980 As The Fed Issues Dovish Rate Guidance

In the early Asian session, the USD/CHF pair is struggling to maintain its auction above the immediate support level of 0.8980. The Swiss Franc has retreated following a reversal that brought it close to the psychological resistance of 0.90.

S&P500 futures have recouped a portion of their early Asia losses, but the risk aversion theme remains strong in light of the ambiguity surrounding United States debt-ceiling negotiations. US stocks declined on Friday after US President Joe Biden deemed unacceptable the partisan language of Republican leaders. The Democrats cannot accept the White House's proposed 8 percent cut to overall budget expenditure initiatives.

 US Vice President Joe Biden informed Democrats that Republicans intend to prevent their reelection in 2024. The White House is prepared to slash average spending on education and law enforcement by 22%; however, a substantial 8% reduction in overall expenditures is astronomical. In the meantime, US Treasury Secretary Janet Yellen continues to emphasize the need for a debt-ceiling increase to prevent a default on June 1 payments.

As the Federal Reserve (Fed) is anticipated to maintain its steady interest rate policy, the US Dollar Index (DXY) is aiming to test Friday's low around 103.00. Fed Chair Jerome Powell stated on Friday that strict credit conditions imposed by regional banks in the United States to protect their assets have reduced the need for higher interest rates for the time being.

Rising concerns of a U.S. default increase the yields on U.S. Treasuries. The yields on 10-year US government bonds have surpassed 3.69 percent.

On the front of the Swiss Franc, Q1 Industrial Production data will be closely monitored. The previous economic data was 6.1%. Inflationary pressures in the Swiss economy have diminished as the Swiss National Bank (SNB) has raised interest rates. Swiss Employment Level data will be closely monitored later this week.