- USD/CHF weakens to around 0.7765 in Wednesday’s early European session.
- Demand for the Swiss Franc remains high due to ongoing Middle East tensions.
- The US February CPI inflation report will be closely watched on Wednesday.
The USD/CHF pair loses ground to near 0.7765 during the early European trading hours on Wednesday. Ongoing Middle East tensions continue to boost a safe-haven currency such as the Swiss Franc (CHF) against the US Dollar (USD). All eyes will be on the US February Consumer Price Index (CPI) inflation report later on Wednesday.
The Ministry of Defense of the State of Qatar said on Wednesday that armed forces intercepted a missile attack that targeted the country, per Reuters. The statement came as Iran continues to target its neighboring countries and US assets in the region amid the ongoing US and Israeli campaign against the Islamic regime in Tehran.
Signs of escalating tensions and a prolonged war in the Middle East could provide some support to the CHF and act as a headwind for the pair in the near term. However, positive developments surrounding potential resolution in the Iran conflict could reduce the “war premium,” capping the upside for the Swiss Franc.
Traders will closely monitor the upcoming US inflation data on Wednesday to gauge future Federal Reserve (Fed) interest rate moves. Markets expect to see headline CPI increase by 2.4% YoY in February, while core CPI, which excludes the often-volatile food and energy categories, is projected to show a rise of 2.5% during the same period. In case of hotter-than-expected inflation data, this could lift the USD against the CHF.
