- USD/CHF edges lower to near 0.7805 in Wednesday’s early European session.
- Rising tensions in the Middle East could boost the Swiss Franc, but verbal intervention from the SNB might cap its upside.
- Traders await the Swiss CPI and US Services PMI data later on Wednesday.
The USD/CHF pair loses traction to around 0.7805 during the early European session on Wednesday. The Swiss Franc (CHF) gathers strength against the Greenback on safe-haven flows stemming from Middle East tensions.
The US and Israel’s attacks on Iran and Lebanon continue, with a strike on a hotel near Beirut and the building of the Assembly of Experts in the Iranian city of Qom. Tehran continues retaliatory attacks on Israel and US targets in the Middle East, with strikes reported on the US embassy in Dubai and a port in the city of Fujairah in the United Arab Emirates. Heightened geopolitical risks continue to drive traders toward the Swiss Franc, a safe-haven currency, in the near term.
The Swiss National Bank (SNB) on Monday delivered aggressive verbal intervention, signaling a willingness to counter CHF’s ‘excessive’ appreciation. This, in turn, might cap the upside for the CHF and act as a tailwind for the pair.
“We are prepared to intervene in the foreign exchange market to counter a rapid and excessive appreciation of the Swiss franc, which jeopardises price stability in Switzerland,” the SNB said in a statement.
The Swiss Consumer Price Index (CPI) and the US February ISM Services Purchasing Managers Index (PMI) reports will be in the spotlight later on Wednesday. If the US Services PMI reading comes in better than the expectation, this might reinforce the US Federal Reserve (Fed) to adopt a more hawkish stance and keep the interest rate higher for longer.
