USD/CHF falls toward 0.8050 as traders expect multiple rate cuts by Fed

• USD/CHF struggles amid weaker US economic data reinforced the multiple Fed rate cuts in 2025.
• Fed Governor Michelle Bowman remarked that three interest rate cuts are likely to be appropriate this year.
• The Swiss precious metals association voiced concern about the possible impact of increased tariffs on gold exports to the US.

USD/CHF loses ground after two days of gains, trading around 0.8060 during the Asian hours on Monday. The pair edges lower due to rising odds of the Federal Reserve (Fed) delivering multiple rate cuts by the end of this year. Tuesday's US consumer inflation data, followed by the preliminary UK Q2 GDP print and the US Producer Price Index (PPI) due on Thursday, will be eyed to gain further impetus for the United States (US) economic conditions.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is retracing its recent gains and trading around 98.00 at the time of writing. The Greenback faces challenges as the soft US economic data prompted traders to price in the possibility of more interest rate cuts this year.

The higher Initial Jobless Claims and lower July's Nonfarm Payrolls in the United States (US) have boosted the expectations for a Fed rate cut next month, with another possible move in December. Markets are now pricing in approximately 89% odds of a Fed rate cut at the September meeting, up from 80% a week ago, according to the CME FedWatch tool.

Moreover, Fed Governor Michelle Bowman stated on Saturday that three interest rate cuts are likely to be appropriate this year. St. Louis Fed President Alberto Musalem noted on Friday that US economic activity remains stable but warned of potential risks ahead, noting the Fed could fall short on both its inflation and employment goals, with particular downside risks to jobs.

The downside of the USD/CHF pair could be limited as the Swiss Franc (CHF) may struggle due to the potential for domestic economic fallout from newly enacted 39% US tariffs. On Friday, the Swiss precious metals association expressed concern over the potential impact of higher tariffs on gold shipments to the United States. Additionally, the Swiss National Bank (SNB) may still push interest rates further into negative territory, as annual inflation in Switzerland rose to 0.2% in July, above the 0.1% forecast but still close to zero.