• USD/CHF depreciates as traders expect a dovish statement on policy outlook by the Fed’s Powell.
• The decline in the US Treasury yields contributes to the downward pressure on the US Dollar.
• The safe-haven CHF may extend its gain due to the ongoing deadlock in securing a truce between Israel and Hamas.

USD/CHF edges lower as the US Dollar (USD) loses ground ahead of the US Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium scheduled later in the North American session. Powell may deliver a statement about the possibility of interest rate cuts in the United States (US), which is highly anticipated by market participants. The USD/CHF pair trades around 0.8520 during the Asian session on Friday.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, faces challenges amid declining US Treasury yields. The DXY trades around 101.30 with 2-year and 10-year yields on US bond coupons standing at 3.99% and 3.85%, respectively, at the time of writing.

On Thursday, Federal Reserve Bank of Boston President Susan Collins indicated that it will soon be appropriate to start cutting rates, emphasizing that incoming data will guide the pace of these cuts. Meanwhile, Kansas City Fed President Jeff Schmid mentioned that he is closely examining the factors behind the rise in the unemployment rate and will rely on data to determine whether to support a rate reduction next month.