USD/CHF climbs to near 0.9050 amid diminished geopolitical tension in Middle East

• USD/CHF edges higher as US Dollar improves on reduced chances of a Fed rate cut in June.
• The de-escalated tension in the Middle East could weaken the demand for safe-haven CHF.
• Higher US Treasury yields are contributing support for the Greenback.

USD/CHF gains ground for the second consecutive session on Monday, advancing to near 0.9050 during the European trading hours. Israel's decision to withdraw additional troops from Southern Gaza, possibly due to growing international pressure, has contributed to easing tensions. Additionally, peace talks between Israel and Hamas have resumed in Egypt, reducing concerns that may weaken demand for the safe-haven Swiss Franc (CHF).

In other news, the Swiss Unemployment Rate, not seasonally adjusted, increased by 2.3% month-on-month in March, slightly higher than the previous rise of 2.2%. The unemployment rate stood at 2.4% in March 2024, unchanged from the previous month on a non-seasonally adjusted basis.

At the time of writing, the US Dollar Index (DXY) trades higher around 104.30, propelled by a surprising beat in the Nonfarm Payrolls (NFP) report. The strong labor market performance in March, exceeding expectations, has reinforced bullish sentiment for the US Dollar.

The NFP reported a significant increase of 303,000 jobs in March, surpassing expectations of 200,000. However, the previous growth of 275,000 was revised downward to 270,000. Additionally, US Average Hourly Earnings rose by 0.3% month-over-month in March, meeting expectations. On an annual basis, there was an increase of 4.1%, aligning with the market consensus but slightly lower than the prior reading of 4.3%.

According to the CME FedWatch Tool, the probability of a rate cut has decreased to 46.1%. Traders are now eagerly awaiting the release of US Consumer Price Index data for March, scheduled for Wednesday.