USD/CHF falls to 0.9000 on market optimism, US inflation in focus

• USD/CHF drops sharply to 0.9000 as US Dollar plunges ahead of US inflation data.
• The S&P 500 opens positive, indicating demand for risk assets.
• The SNB is expected to cut interest rates again as Swiss inflation remains below 2%.

The pair USD/CHF falls sharply to 0.9010 in the first hours of the American session. The Swiss franc weakens as market sentiment remains cheerful, despite traders cutting bets supporting a Federal Reserve (Fed) rate cut from the June meeting. Market expectations for the Fed to cut rates decline as strong US Nonfarm Payrolls (NFP) data bolsters inflation prospects.

The S&P 500 opens positive, showing decent demand for risk assets. The 10-year US Treasury yield falls to 4.37% on fears that risks to jobs and inflation will become unbalanced if interest rates remain high for a long period.

On Monday, Chicago Federal Reserve President Austan Goolsbee said the central bank should consider how long to keep interest rates higher. Goolsbee warned that the unemployment rate could rise if interest rates remain high for too long.

US Dollar Index (DXY) falls to 103.90 amid market optimism. Looking ahead, investors will focus on U.S. consumer price inflation data for March, due out on Wednesday.

Both headline and core monthly inflation are expected to have increased at a slower pace of 0.3%, down from 0.4% in February. Over the same period, economists expect the annual headline CPI to accelerate to 3.4% from 3.2%, while core inflation will slow to 3.7% from 3.8%. Inflation data is expected to significantly influence market expectations for Fed rate cuts.

As for the Swiss Franc, investors expect the Swiss National Bank to cut interest rates again as inflation remains consistently below 2%. The SNB led the global rate-cutting cycle by surprise announcing a dovish decision at its March meeting. The central bank reduced its financing costs by 25 basis points, to 1.5%.