07 Jan 2025

• USD/CHF loses traction to near 0.9040 in Tuesday’s early European session. 
• Trump's tariff confusion and cautious mood boost the Swiss Franc against the USD. 
• The cautious stance of the Fed might cap the downside for the pair.
• The USD/CHF currency pair is experiencing a decline, trading around 0.9040 during the early hours of European trading on Tuesday. The US Dollar (USD) is under pressure due to uncertainty surrounding President-elect Donald Trump’s proposed tariff strategies. Investors are keenly observing the potential aggressiveness of Trump's policies once he assumes office. Additionally, the preliminary data for the Eurozone Harmonized Index of Consumer Prices (HICP) for December is set to be released later on Tuesday.
  
  According to a report from the Washington Post on Monday, Trump is contemplating a tariff strategy that would concentrate on a limited range of goods and services. However, Trump refuted this claim in a post on Truth Social, stating, “That is wrong.” Investor sentiment has turned cautious in anticipation of the upcoming release of the Federal Open Market Committee (FOMC) minutes and the US Nonfarm Payrolls (NFP) report, scheduled for Wednesday and Friday, respectively. This uncertainty is contributing to the weakening of the Greenback against the Swiss Franc (CHF).
  
  Moreover, ongoing geopolitical tensions in the Middle East and the persistent conflict between Russia and Ukraine may enhance the appeal of the CHF as a safe-haven currency, posing additional challenges for the pair. Local news outlet Aljazeera reported that Israel's relentless bombardment of Gaza has resulted in six fatalities, including a child, in its latest strikes on residential areas, raising the total death toll for Monday to at least 28.
  
  Nevertheless, the cautious approach of US Federal Reserve (Fed) officials may mitigate the losses of the USD. Fed Governor Lisa Cook indicated on Monday that policymakers might adopt a more careful stance regarding further rate cuts, highlighting the resilience of the labor market and persistent inflation. Several Fed officials are scheduled to speak later this week, and any hawkish remarks could potentially bolster the Greenback against its competitors in the short term.