• USD/CHF trades on a stronger note around 0.8545 in Wednesday’s Asian session. 
• Rising Fed rate cut expectations might cap the pair’s upside. 
• The Fed Chair Jerome Powell’s speech on Friday will be closely watched. 

The USD/CHF pair holds positive ground near 0.8545 on Wednesday during the early European trading hours. The modest recovery of the Greenback provides some support to the major pair. However, the upside of the pair might be limited due to the rising expectation that the US Federal Reserve (Fed) will cut the interest rate in the September meeting. Traders await the July Federal Open Market Committee (FOMC) Minutes meeting minutes on Wednesday. 

The monetary policy in the US is imminently approaching its inflection point. The pace and number of rate cuts in this easing cycle will be data-dependent. The markets are now pricing in a nearly 67.5% odds of a 25 basis points (bps) Fed rate cut in its September meeting, down from 76% a day ago, according to the CME FedWatch Tool. The probability of a 50 basis points rate cut dropped to 32.5% from 53.0% last week. 

On Tuesday, Fed Governor Michelle Bowman noted that she will remain cautious in her approach to any change in the policy stance. She further stated that overreacting to any single data point could jeopardize the progress already made. The Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday might offer more hints about further clues on the Fed’s plans. The rising bets of rate cuts and the dovish stance of the Fed are likely to undermine the USD against the Swiss Franc (CHF).