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.

The Swiss Franc (CHF) may advance further due to safe-haven flows due to the ongoing deadlock in securing a truce between Israel and Hamas. The stalemate increases the risk of a broader conflict in the Middle East. Disagreements over Israel's military presence in Gaza and Palestinian prisoner releases are hindering progress on a ceasefire and hostage deal.

Sources, including two Hamas officials and three Western diplomats, indicate that these disputes have arisen from additional demands introduced by Israel after Hamas initially accepted a ceasefire proposal, according to Reuters.

Commerzbank FX Analyst Michael Pfister expects moderate weakness for the Swiss franc (CHF) in the near term, forecasting that the Swiss National Bank (SNB) will likely reduce interest rates further. However, Pfister emphasized to remember that global demand for safe-haven assets may remain strong due to ongoing uncertainties.

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