- USD/CHF depreciates as safe-haven demand increases amid the uncertain Ukraine–Russia situation.
- The US Dollar may face challenges due to growing odds of two more Fed rate cuts in 2026.
- Traders await the FOMC December Meeting Minutes to gain insights into the Fed’s 2026 outlook.
USD/CHF loses ground after two days of gains, trading around 0.7880 during the Asian hours on Tuesday. The Swiss KOF Leading Indicator will be eyed later, which could offer future trends of the overall economic activity.
The Swiss Franc (CHF) potentially receives support from increased safe-haven demand, which could be attributed to the uncertain Ukraine-Russia situation. Russia’s foreign minister said Moscow’s negotiating stance would shift following alleged strikes on President Vladimir Putin’s residence.
Additionally, Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” with the United States (US), Europe, and Israel have raised fears of broader instability, with Trump warning of further strikes if Iran resumes rebuilding its nuclear programme.
The USD/CHF pair also struggles as the US Dollar (USD) faces challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
Traders adopt caution ahead of the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day, which could offer insights into the Federal Reserve’s (Fed) 2026 outlook. Focus will be shifted toward the US Initial Jobless Claims data scheduled to be released on Wednesday.
