The USD/CHF pair continued its upward trajectory, reaching around 0.9030 during early European trading on Tuesday, supported by a stronger US Dollar (USD). Investors are awaiting key economic data, including the NY Empire State Manufacturing Index for February, set for release later in the day. Additionally, markets are focused on a speech by Federal Reserve (Fed) official Mary Daly for further insights into the central bank’s policy outlook.
US Inflation Data Reinforces Fed’s Cautious Stance
The Greenback remains buoyant following last week’s inflation data, which showed US consumer prices rising at the fastest pace in nearly 18 months. The report reinforced the Fed’s cautious approach to rate cuts, with officials signaling that monetary policy will remain restrictive in the near term. “An extended pause during the first half of this year looks justified and will give the Fed time to assess the impact of trade measures on inflation,” noted strategists at ANZ.
Geopolitical Tensions Could Impact USD/CHF
Meanwhile, geopolitical risks in the Middle East remain in focus. Israeli airstrikes hit multiple targets in southern Lebanon on Monday night, breaking the ceasefire just before the scheduled military withdrawal from the area, according to Anadolu Agency.
Investors are closely monitoring the situation, as further escalation in the region could drive demand for the safe-haven Swiss Franc (CHF), potentially limiting USD/CHF gains. Market sentiment could shift rapidly depending on developments in the conflict.
Market Outlook
While the USD/CHF pair remains supported by strong US economic fundamentals, traders will be watching geopolitical developments and upcoming economic data for further direction. The Fed’s policy stance and any escalation in the Middle East will be key drivers influencing the pair in the coming days.
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