USD/CHF aims to break the 0.8900 major level, focus on US PMI data

• USD/CHF extends its losses ahead of US economic data.
• Swiss Franc strengthened on geopolitical tensions in Middle-East.
• Dovish stance by the Fed is weighing on the US Dollar.

USD/CHF loses ground for the second successive day, trading lower near 0.8900 during the Asian session on Tuesday. The pair faces challenges due to the downfall in the US Dollar (USD), which could be attributed to the dovish remarks by the US Federal Reserve (Fed) officials.

The Swiss Franc, considered a safe haven, may have found support amidst the geopolitical tensions between Israel and Hamas. However, diplomatic efforts to ease tensions in the Israel-Hamas Gaza Strip have contributed to a reduction in market risk aversion, boosting investors’ risk appetite.

Investors will likely watch the ZEW Survey Expectations for October on Wednesday. The sentiment data for September stood at -27.6. If the upcoming data shows a further decline, it would signal a worsening in Switzerland’s business conditions and labor market.

The US Dollar Index (DXY) continues its four-day losing streak, possibly influenced by subdued US Treasury yields. The spot price hovers around 105.50. Despite reaching its highest point since 2007 at 5.02%, the 10-year Treasury yield promptly reversed course, dropping to 4.85% in the latest update.

Atlanta Federal Reserve President Raphael Bostic expressed skepticism about a US central bank rate cut before the middle of next year. Fed Philadelphia President Patrick Harker preferred maintaining existing interest rates, while Fed Cleveland President Loretta Mester suggested that the US central bank is either at or very close to the peak of the rate hike cycle.

Market watchers are gearing up for a data-packed week. Tuesday will see scrutiny of the US S&P Global PMI, followed by a close watch on Thursday for Q3 Gross Domestic Product (GDP) figures. The week concludes with a focus on the Core Personal Consumption Expenditures (PCE) on Friday.