Watching tensions between Russia and Ukraine, the USD/CHF is stable over 0.8800

The USD/CHF pair shows a modest rise to around 0.8835 during the early European session on Tuesday, supported by a strengthening US Dollar. Switzerland is set to release its October Trade Balance figures later in the day, while Federal Reserve (Fed) member Jeffrey Schmid is also scheduled to speak.

Robust US economic data, alongside inflation concerns driven by proposed tariffs, have intensified speculation that the Fed may slow the pace of its interest rate cuts, providing support for the US Dollar. Additionally, recent remarks from Fed Chair Jerome Powell have further buoyed the Greenback. Powell noted that strong economic growth, a healthy job market, and persistent inflation above the 2% target suggest the central bank has no urgency to lower rates.

Market participants are closely monitoring commentary from Fed officials for further signals regarding US interest rate policy. Bets on a 25 basis points rate cut in December have declined, with the likelihood now below 59%, down from 62% a day earlier, as reported by the CME FedWatch tool.

On the other hand, elevated concerns surrounding the Russia-Ukraine conflict and ongoing tensions in the Middle East could drive demand for safe-haven assets like the Swiss Franc. Notably, President Joe Biden has authorized Ukraine to conduct strikes inside Russia using long-range US missiles for the first time, according to a CNN report on Sunday. US sources indicate that Ukraine is preparing to launch its initial long-range attacks, while Russia has warned of retaliation, describing the development as a "radical change" in the conflict.

Paraphrasing text from "FX Street" all rights reserved by the original author.