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- USD/CHF gains momentum to around 0.8340 in Monday’s early European session, up 0.60% on the day.
- Optimism in US-China trade talks undermines the CHF, a safe-haven currency.
- Persistent geopolitical risks might cap the upside for the pair.
The USD/CHF pair rises to near 0.8340 during the early European session on Monday. The Swiss Franc (CHF) edges lower against the Greenback amid easing concerns of a trade war between the United States (US) and China, the world’s two biggest economies.
Both China and the US have said that they’ve made progress at trade talks in Switzerland, weighing on the safe-haven currency like the CHF and creating a tailwind for the pair. US Treasury Secretary Scott Bessent described the discussions as “productive and constructive,” while China’s Vice Premier He Lifeng said trade talks with US officials is “an important first step” in stabilising bilateral trade relations.
Furthermore, the hawkish stance from the US Federal Reserve’s (Fed) provides some support to the US Dollar (USD). Fed officials signalled that it is not leaning towards cutting interest rates anytime soon. Traders expect the US central bank will deliver wo additional rate reductions towards the end of the year.
On the other hand, persistent geopolitical risks could boost the safe-haven flows and help limit the CHF’s losses. India on Saturday accused Pakistan of violating a ceasefire agreement reached earlier the same day between the Directors General of Military Operations (DGMOs) of both nations. India’s Foreign Secretary, Vikram Misri, said that Indian forces had been directed to give a firm response to any further ceasefire breaches along the Line of Control (LoC) and the international border.
