#CurrencyPairPrediction Interest rate differentials refer to the difference in interest rates set by two countries' central banks. When one country offers higher interest rates than another, it can attract foreign capital, leading to currency appreciation in that country. This difference can significantly affect currency pairs, like USD/CHF (U.S. Dollar/Swiss Franc). The volatility of the USD/CHF pair can be influenced by changes in interest rate differentials between the U.S. Federal Reserve (Fed) and the Swiss National Bank (SNB). If the Fed raises rates while the SNB keeps them stable, the USD might strengthen against the CHF, increasing volatility as traders react to potential economic shifts. Conversely, a smaller interest rate differential or a change in expectations about future rate hikes can lead to fluctuations in the exchange rate, as investors adjust their positions based on anticipated returns. In summary, interest rate differentials are a key driver of volatility in the USD/CHF currency pair, with market participants reacting to monetary policy decisions that impact the relative attractiveness of holding U.S. dollars versus Swiss francs.