Swiss Franc holds ground as US Dollar consolidates ahead of CPI inflation data

USD/CHF remains steady after posting minor losses in the previous day, trading around 0.8190 during Asian hours on Tuesday. The pair moves little as the US Dollar (USD) trades sideways amid easing safe-haven demand alongside growing speculation of a diplomatic breakthrough between Washington and Tehran. Meanwhile, crude oil prices dropping to their lowest levels since August are helping relieve inflationary pressure.

US President Donald Trump stated that further military strikes against Iran seem unnecessary, describing the war as "militarily, effectively over" while maintaining that the US remains "locked and loaded" to protect regional stability at the request of neighboring nations.

Traders’ attention now shifts to upcoming US economic indicators, headed by the October Consumer Price Index (CPI) report scheduled for Tuesday. Market forecasts anticipate headline CPI rising to 3.9% year-over-year (from 3.7%), while core CPI is expected to edge up from 2.6% to 2.8%.

Building on last week's robust Nonfarm Payrolls report, hawkish remarks from Federal Reserve officials—including Richmond Fed President Thomas Barkin and Chicago Fed President Austan Goolsbee—have fueled expectations of higher rates. According to the CME FedWatch Tool, the odds of a Fed rate hike at the December meeting have surged to 84%, up from 76% a day prior.

The Swiss Franc (CHF) remains under pressure as the Swiss 10-year government bond yield holds near a two-month low of 0.45%. Renewed diplomatic momentum in the Middle East has curbed global demand for safe-haven sovereign debt, dampening overall support for the Franc despite the lack of a signed agreement.

Strategists at UOB Group maintain their cautious medium-term stance on USD/CHF, reiterating that their “update from yesterday (05 Nov, spot at 0.8165) remains valid.” They continue to see scope for further weakness, noting that “there is a chance for USD to test 0.8110 before the risk of a recovery increases.” On the topside, UOB emphasises that “a breach of 0.8205 (no change in ‘strong resistance’) would mean that the USD decline from one week ago has run its course,” marking that level as the key line in the sand for any sustained rebound.