The USD/CHF pair edged lower to near the 0.7950 area during the early European session on Wednesday, as the US Dollar came under pressure from rising geopolitical tensions and increasingly dovish signals from US Federal Reserve (Fed) officials. Demand for the safe-haven Swiss Franc (CHF) remained supported amid heightened uncertainty, while traders looked ahead to the US ISM Services Purchasing Managers’ Index (PMI) report later in the session.
Venezuela turmoil boosts safe-haven demand
Market sentiment has been rattled by a major escalation in Venezuela after the US military carried out an operation in Caracas over the weekend, capturing Venezuelan President Nicolás Maduro and his wife.
Both were transferred to the United States and appeared before a federal court in New York on Monday, where they pleaded not guilty to charges including narco-terrorism, weapons offenses, and corruption. In the aftermath, US President Donald Trump stated that Washington is now “in charge” and will oversee Venezuela during a transition period.
Adding to the tension, The Wall Street Journal reported that Russia has deployed a submarine and additional naval assets to escort an aging oil tanker off Venezuela’s coast. Traders are closely monitoring these developments, as any further escalation between the US and Venezuela could intensify risk aversion and drive additional safe-haven flows into the Swiss Franc, weighing further on USD/CHF.
Dovish Fed rhetoric weighs on the US Dollar
Beyond geopolitical factors, the US Dollar is also facing headwinds from dovish commentary by Fed officials. Fed Governor Stephen Miran said on Tuesday that the central bank may need to cut interest rates aggressively this year to sustain economic momentum, reinforcing market expectations for a more accommodative policy stance.
Meanwhile, Minneapolis Fed President Neel Kashkari warned of the risk that the US unemployment rate could “pop” higher, underscoring concerns about the labor market outlook.
With geopolitical risks elevated and Fed policy uncertainty lingering, USD/CHF remains biased to the downside in the near term. Attention now turns to upcoming US macro data, particularly the ISM Services PMI, which could provide fresh direction for the pair and shape expectations around the Fed’s next policy steps.
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