Market Braces for Fed Rate Cuts Amid Banking Concerns

Banking fears drive expectations for Fed rate cuts. USD/CHF and EUR/CHF pairs hit multi-month lows as currency markets react.

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2025 October 19 . 2:02 AM

1 min read

In this picture, we see the coin in gold and brown color. We see some text written as "The United... — In this picture, we see the coin in gold and brown color. We see some text written as "The United States Of America". It might be a money coin. In the background, it is brown in color and it looks like a carpet.

Market Braces for Fed Rate Cuts Amid Banking Concerns

Market participants are anticipating further interest rate cuts by the US Federal Reserve, with a total reduction of about 50 basis points expected by the end of 2025. This follows concerns about the balance sheet quality of smaller regional banks in the US stock market, which have sparked market unease. Meanwhile, currency markets have seen significant movements, with the USD/CHF pair reaching its lowest level in a month and the EUR/CHF pair touching a level not seen since the start of the US trade war.

The USD/CHF pair last traded at 0.7924, having reached a low of 0.7872 during the day, its lowest point in about a month. Similarly, the EUR/CHF pair hit a low of 0.9218 in the morning, roughly the level at the beginning of the US trade war in early April. It then rose to 0.9241, about half a cent more than 24 hours earlier. Market participants are still expecting a rate cut by the US Federal Reserve soon, with the USD/EUR pair last quoted at 1.1662 after reaching a high of 1.1730 during the day.

The potential for a regional banking crisis in the US stock market has led to speculation that the Fed may provide aid through interest rate cuts and liquidity injections. As currency markets continue to react to these developments, market participants await further clarity on the Fed's policy stance and its impact on global financial conditions.