USD/CHF gains traction above 0.9100 ahead of US PPI data

The USD/CHF pair trades on a positive note near 0.9125, the highest level since October 2023 on Thursday during the early European session. The hotter-than-expected US inflation in March has prompted investors to scale back bets on US interest rate cuts this year, which provides some support to the Greenback. However, the ongoing geopolitical tensions in the Middle East might boost safe-haven assets like the Swiss Franc (CHF). 

An unexpected rise in US Consumer Price Index (CPI) data in March pushed out the expected timing of a first-rate cut to September from June. The headline CPI rose 0.4% MoM in March, while the yearly CPI figure advanced 3.5% YoY. Meanwhile, the Core CPI, excluding volatile food and energy components, climbed 0.4% MoM, while jumping 3.8% from a year ago. 

Furthermore, Minutes of the last Fed meeting suggested that participants were worried about elevated inflation and the recent data did not help the Fed gain confidence that inflation moved sustainably towards the 2% target. The higher-for-longer US rate narrative lifts the USD and creates a tailwind for the USD/CHF pair. 

On the other hand, the uncertainty surrounding ceasefire talks between Israel and Hamas and the ongoing geopolitical tensions in the Middle East might boost safe-haven flows, benefiting the Swiss Franc (CHF). Israeli foreign minister Israel Kat warned on Wednesday that Israel will retaliate if Iran attacks from its territory. Earlier, Iran's supreme leader said Israel "must be punished" for an apparent attack on an Iranian consulate building in Syria last week.