• Stronger US inflation data drives market expectations of an 85% chance of a December Fed rate hike.
• Safe-haven US Dollar gains face potential downward pressure as Middle East geopolitical tensions show signs of easing.
• SNB is expected to keep interest rates steady at 0% next month with inflation remaining fully under control.

USD/CHF extends its gains for the second consecutive day, trading around 0.8260 during early European hours on Wednesday. The currency pair continues to appreciate as the US Dollar (USD) remains firm following the latest US inflation report. The data has reinforced market expectations for a Federal Reserve (Fed) rate hike in December, with the CME FedWatch Tool currently pricing in an 85% probability of a rate increase next month.

The US Consumer Price Index grew 0.4% month-over-month in October, beating the 0.3% forecast despite slowing from September’s 0.6% gain. Core CPI, which excludes volatile food and energy prices, rose 0.3% to match September’s pace and top expectations of 0.2%. Annual inflation metrics for October were omitted by the Bureau of Labor Statistics due to last year’s government shutdown.

According to Commerzbank, US inflation remains uncomfortably elevated, with the bank stressing that “prices are still rising too quickly, even though the increase was somewhat smaller than in September.” In their view, the latest moderation in the monthly pace of gains does not yet signal a convincing shift toward price stability.

However, the Greenback may face near-term headwinds from easing safe-haven demand as geopolitical tensions show signs of cooling. US President Donald Trump signaled that further military action against Iran might not be necessary, a sentiment echoed by US Secretary of State Marco Rubio at the G7 meeting. Meanwhile, Congressional Democrats are looking to leverage the upcoming government funding deadline to push the administration toward a peaceful diplomatic outcome.

On the Swiss front, Swiss National Bank (SNB) Chairman Schlegel noted that price pressures remain contained and that the central bank has successfully fulfilled its medium-term price stability mandate. Declining oil prices have further moderated inflationary risks. Consequently, the SNB is widely expected to hold interest rates steady at 0% at its upcoming meeting. While financial markets are pricing in a potential rate hike by early 2027, most economists expect the first increase to occur closer to late 2027.

Technical Analysis:

In the daily chart, USD/CHF trades at 0.8260. With no key moving averages or structural levels provided, the near‑term tone is guided mainly by momentum, where the 14‑day Relative Strength Index (RSI) around 54 tilts slightly positive after recovering from mid‑range readings, hinting that downside pressure has eased and buyers are gradually regaining control.

On the downside, the lack of clearly defined support levels in the dataset suggests traders will continue to lean on recent swing lows and intraday price action for reference, while on the topside, any recovery is likely to face supply first at prior reaction highs not specified numerically here. The latest FXS Fed Sentiment Index reading at 145.61, near the top of its recent range, subtly reinforces a constructive backdrop for the dollar, which could help USD/CHF extend gains if price breaks above nearby chart highs on the daily timeframe.

Goolsbee flags ‘real inflation issue’ as hawkish tone lifts Dollar

Fed’s Goolsbee delivered a notably more hawkish tone, with an FXS Speechtracker score of 8/10 versus a historical average of 6.8/10, underscoring rising concern about persistent price pressures. The emphasis that the latest CPI was “borderline disturbing,” that services inflation is “not coming down,” and that there is “a real inflation issue” that the Fed is “going to have to deal with” signals a lower tolerance for upside inflation surprises despite a “steady and stable” job market. The repeated stress on inflation becoming embedded in expectations and the assertion that “everything is always on the table” keep the door open to renewed tightening or a longer-for-longer stance, a configuration typically supportive for the Dollar and negative for risk-sensitive currencies.

The FXS Fed Sentiment Index rose by 1.69 points to 145.61, reinforcing that the speech sits firmly in hawkish territory well above the neutral 100 mark. This upward shift in the FXS Fed Sentiment Index, aligned with the elevated FXS Speechtracker score, should underpin expectations for restrictive policy persistence and may continue to favor the Dollar over the Euro and Yen in the near term.