The USD/CHF pair attracts some buyers near the 0.8500 psychological mark on Tuesday and builds on the overnight goodish rebound from its lowest level since early January.
A combination of factors assists USD/CHF to snap a five-day losing streak to a multi-month trough. The risk-on impulse undermines the safe-haven CHF and offers support amid reviving USD demand. Bets for a 50 bps Fed rate cut in September should cap the USD and act as a headwind for the pair. Spot prices, for now, seem to have snapped a five-day losing streak and trade just above the mid-0.8500s during the early European session.
Furthermore, the risk of a broader Middle East conflict remains in play and should keep a lid on the market optimism. The fears resurfaced after Iran, Hamas and Lebanese group Hezbollah pledged to retaliate against Israel for last week’s assassination of Hamas political chief Ismail Haniyeh in Tehran. This should limit losses for the CHF and warrants caution before positioning for any further appreciating move for the USD/CHF pair in the absence of relevant US macro data.
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