USD/CHF struggles to build on Monday’s positive move to a one-week top.
Tariff jitters weigh on investors’ sentiment and benefit the safe-haven CHF.
The emergence of fresh USD selling further exerts pressure on spot prices.
The USD/CHF pair attracts fresh sellers during the Asian session on Tuesday and reverses a part of the previous day's strong move higher to a one-week top, around the 0.8000 psychological mark. Spot prices slide to the 0.7960 area, or a fresh low in the last hour amid a combination of negative factors.
The global risk sentiment takes a hit in the wake of fresh concerns over US President Donald Trump's trade tariffs. In fact, Trump released the first batch of letters outlining higher tariffs against a slew of major economies and also threatened that any Country aligning with the anti-American policies of BRICS will be charged an additional 10% tariff. This, in turn, tempers investors' appetite for riskier assets and benefits the Swiss Franc's (CHF) safe-haven status, which, along with the emergence of some US Dollar (USD) selling, exerts downward pressure on the USD/CHF pair.
Against the backdrop of US fiscal concerns, worries about the potential economic fallout from Trump's trade tariffs fail to assist the USD to build on Monday's positive move. The downside for the USD, however, seems limited amid expectations that the Federal Reserve will keep interest rates elevated in anticipation of worsening inflation as a result of higher import taxes and a still resilient US labor market. This might hold back traders from placing aggressive bearish bets around the USD/CHF pair and help limit losses in the absence of any relevant economic releases.
The market focus, meanwhile, remains glued to the FOMC meeting minutes, due on Wednesday. Market participants will look for cues about the Fed's rate-cut path, which, in turn, will play a key role in influencing the near-term USD price dynamics. Apart from this, the broader risk sentiment should influence the safe-haven CHF and contribute to providing some meaningful impetus to the USD/CHF pair.
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