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• USD/CHF holds steady as market participants await speeches from Fed members.
• Fed member Kugler indicated rates will be maintained longer if upcoming data does not confirm a slowdown in inflation.
• Swiss 10-year bond yield declined to near 0.54%, nearing its lowest level since August 2022.

USD/CHF holds ground near 0.8940 during the Asian session on Wednesday. The USD/CHF pair may receive support from a modest rebound in the US Dollar (USD), which is likely influenced by improved Treasury yields.

Federal Reserve (Fed) Board of Governors member Dr. Adriana Kugler recently noted that while inflationary pressures have eased, the Fed requires more data to justify a rate cut. Dr. Kugler suggested that if upcoming data fails to show progress toward the 2% inflation target, maintaining current rates longer may be appropriate.

Market focus turns to key US economic data and the Fed Beige Book on Wednesday, alongside speeches from Fed officials Thomas Barkin and Christopher Waller. On the Swiss front, attention will shift to Trade Balance data due on Thursday.

On the Swiss front, the 10-year government bond yield further declined to near 0.54%, nearing its lowest level since August 2022, reflecting a similar trend seen in US bond yields. This movement followed remarks from Federal Reserve Chair Jerome Powell, which bolstered expectations for a rate cut by the Fed in September.

Fed Chair Powell, on Monday, indicated that recent US inflation data "add somewhat to confidence" that inflation is progressing towards the Fed’s target sustainably, implying that a move towards interest rate cuts could be forthcoming.

The Swiss National Bank (SNB) reduced its key interest rate by 25 basis points for the second consecutive meeting in June. This decision was driven by subdued inflationary pressures and the resilience of the Swiss Franc (CHF).

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