USD/CHF flat-lines below 0.8800, US Retail Sales eyed

The USD/CHF pair remains confined in a narrow trading range of 0.8765-0.8780 during the Asian trading hours on Wednesday. The stronger-than-expected US CPI inflation data in February lift the US Dollar (USD). Nonetheless, the risk-averse environment might boost safe-haven demand and benefit the Swiss Franc (CHF). The pair currently trades near 0.8776, adding 0.02% on the day. 

Inflation remains elevated in the United States in February. The Labor Department reported on Tuesday that the Consumer Price Index (CPI) climbed 3.2% from a year earlier from 3.1% in January. On a monthly basis, the headline CPI figure increased by 0.4% from the previous month of a 0.3% gain. Additionally, the Core CPI, excluding volatile food and energy items, rose 0.4% MoM in February, above the market consensus of 0.3%. 

The hotter CPI inflation report might influence Federal Reserve (Fed) officials to wait until the summer before beginning to cut interest rates. This, in turn, provides some support for the Greenback. Fed Chair Jerome Powell said last week that the Fed is likely to cut the interest rate this year, but the central bank needs to see more evidence of inflation data to ensure that inflation returns to the 2% target. Investors are pricing in 70% odds of rate cuts in June, according to the CME FedWatch tool.

On the other hand, the escalating geopolitical tensions in the Middle East, uncertainty, and risk-averse environment could boost safe-haven assets like CHF and create a headwind for the USD/CHF pair. 

In the absence of the top-tier economic data released from the US and Swiss dockets on Wednesday, the pair remains at the mercy of the USD price dynamics and the broader risk sentiment. On Thursday, the Swiss Producer and Import Prices and US Retail Sales February will be released.