USD/CHF Loses Momentum Above The 0.9000 Region As Israel-Palestine Tensions Dominate The Market

During the early Asian session on Monday, selling pressure persists above the 0.9000 area on the USD/CHF pair. The pair's decline is reinforced by the weakening US Dollar (USD) and the reduction in US Treasury yield in the midst of escalating geopolitical tensions in the Middle East. Presently, the pair is trading near 0.9018, with no change for the day.

One-year inflation expectations at the University of Michigan (UoM) increased from 3.2% to 3.8% on Friday, while five-year inflation projections rose from 2.8% to 3%. In addition, preliminary data from the US Michigan Consumer Sentiment Index decreased to 63.0 on Friday, from 68.1 previously, which was below market expectations of 67.4.

As a result of the optimistic inflation data and the increased inflation expectation, investors anticipate that the Federal Reserve (Fed) may increase interest rates by the end of the year. The annual and monthly US Consumer Price Index (CPI) figures for September were 3.7% and 0.4%, respectively. The dovish remarks made by Fed officials may, nevertheless, encourage bull traders to increase their aggressive bullish wagers.

According to economic data released by the Swiss Federal Statistical Office on Friday, producer and import prices for the country fell 1.0% year-over-year in September, following a 0.8% decline in August. Monthly, the figures decreased by 0.1%, compared to a previous decline of 0.8%.

Israeli Prime Minister Benjamin Netanyahu pledged on Sunday to "demolish Hamas" as his military prepared to launch ground operations in Gaza in an effort to eradicate the militant organisation. Israel has been indicating that, notwithstanding the worsening humanitarian situation within the coastal Palestinian enclave, it is preparing to conduct ground operations in Gaza. While the United States has been working to alleviate food, water, and petroleum shortages, Biden has called for civilian protection. Nevertheless, the USD/CHF pair could be hindered by the escalating geopolitical tensions between Israel and Palestine, which could strengthen the Swiss Franc, a traditional safe-haven currency.

Investors will closely monitor the geopolitical tensions that are unfolding in the Middle East. Tuesday will mark the release of September US Retail Sales, which are anticipated to increase by 0.2%. The Swiss Trade Balance for September is scheduled to be released on Thursday. In the vicinity of the USD/CHF pair, traders will identify trading opportunities based on these figures.