[MARKET ANALYSIS] Mostly flat FX trade heading into the FOMC; CHF narrowly lags ahead of tomorrow’s SNB

• DYX is flat in a narrow 99.465-99.708 range at the time of writing, following two consecutive days of declines as the Buck tracked oil prices. Traders gear up for the FOMC today (at 18:00 GMT given the time change), which is expected to leave rates unchanged at 3.50-3.75%. Money markets do not expect a rate cut before Q4 2026, although pricing may have been influenced by a rise in short-term yields following the recent energy price surge linked to the Middle East conflict. Analysts are in agreement that Chair Powell will likely avoid strong guidance statements on inflation/growth impacts from the Iranian war, given the volatility of geopolitics and commodities.
• EUR and GBP are also flat against the Buck given a lack of fresh headlines driving macro price action, and with participants gearing up for tomorrow’s ECB and BoE, which will likely stress a data-dependent and wait-and-see approach as energy prices remain elevated in the third week of the Iranian war. EUR/USD sits in a tight 1.1518-1.1549 band, and GBP/USD in a 1.3341-1.3375 range.
• JPY traded indecisively since APAC hours ahead of tomorrow's BoJ policy announcement, in which the central bank is unanimously forecast to refrain from any policy tweaks, while there was late pressure seen as oil trickled lower. USD/JPY dipped to a 158.57 low (vs 159.14 high) before stabilising around the 159.00 mark.
• CHF is the relative laggard ahead of tomorrow’s quarterly SNB policy announcement, in which the central bank is expected to maintain rates, but focus will likely be on the FX language following the post-war strengthening of the CHF vs the EUR, in which EUR/CHF dipped under 0.9000 at the start March. Furthermore, Switzerland’s SECO today downgraded the country’s 2026 GDP growth forecast, and raised the 2026 CPI forecast – both 2027 metrics were unrevised.
• Antipodeans are uneventful with a mild upward tilt, with AUD/USD holding on to its post-RBA spoils but with broader macro newsflow on the lighter side.

The FX market is showing little movement ahead of the FOMC meeting, with the USD, EUR, and GBP all trading flat while the CHF lags in comparison. The upcoming SNB policy announcement and adjustments in Switzerland's economic forecasts suggest a cautious stance on CHF, highlighting the importance of central bank communications in this uncertain environment. Focus on how the Fed's hold on rates and geopolitical factors may influence broader market sentiments post-announcement.