Ella 
USD/CHF attracted some buyers around the psychological 0.8500 level on Tuesday, building on an overnight rebound from its lowest levels since early January. Currently, spot prices appear to have ended a five-day losing streak, sitting just above 0.8550 in early European trading.
Global stock markets saw some bargain hunting after recent sharp losses and dented demand for the safe-haven Swiss franc. Meanwhile, risk appetite led to a strong rebound in U.S. Treasury yields, helping the dollar recover further from multi-month lows hit on Monday. This, in turn, has pushed USD/CHF higher, although any meaningful appreciation movement remains elusive.
Weak U.S. macro data has heightened concerns about a slowdown in the world’s largest economy and raised expectations for more interest rate cuts from the Federal Reserve. In fact, markets currently see a near 100% chance of a 50 basis point rate cut at the September FOMC policy meeting. This may suppress U.S. bond yields and prevent U.S. dollar bulls from building large positions, thereby suppressing the rise of USD/CHF.
Additionally, risks from broader Middle East conflict remain, which should dampen market optimism. The concerns resurfaced after Iran, Hamas and Lebanon’s Hezbollah pledged retaliation for Israel’s assassination of Hamas political leader Ismail Haniyeh in Tehran last week. This will limit CHF losses and in the absence of relevant US macro data, caution should be exercised before betting on further USD/CHF gains.
