USD/CHF advances on Wednesday, trading around 0.8052 and gaining roughly 0.47% as the US Dollar attracts fresh buying following stronger-than-expected US inflation data. Traders are also monitoring ongoing developments surrounding the Middle East, which continue to influence the inflation and interest-rate outlook.

The headline US Personal Consumption Expenditures Price Index increased 0.2% month-on-month in July, exceeding the 0.1% forecast and reversing June’s 0.1% decline. Annual headline inflation remained at 3.7%, above expectations of 3.6%.

The core PCE index, the Federal Reserve’s preferred measure of underlying inflation, also rose 0.2% month-on-month, matching forecasts and accelerating from June’s 0.1% increase. Annual core inflation remained at 3.3%, in line with expectations.

Although the data reinforce expectations that the Fed will likely leave interest rates unchanged at its upcoming meeting, inflation remains well above the central bank’s 2% target. Persistent tensions in the Middle East are also keeping Oil prices elevated, creating additional upside risks for inflation and leaving the possibility of tighter monetary policy later in the year.

The US Dollar Index climbed nearly 0.25% to around 99.16. The Greenback remains in recovery mode after coming under pressure last week following the US Treasury’s surprise decision to increase purchases of longer-dated government securities, which raised concerns over US debt levels and fiscal credibility.

Geopolitical uncertainty remains elevated. Iran and Oman have yet to finalize arrangements for shipping through the Strait of Hormuz, while Tehran continues to demand an end to the US naval blockade and the broader conflict before normal transit resumes. President Donald Trump also indicated that there is currently no timetable for renewed peace talks.

Meanwhile, Switzerland’s ZEW Expectations Index improved to 12.1 in August from 10.0. However, subdued domestic inflation continues to support expectations that the Swiss National Bank will maintain its policy rate at 0% throughout the year, limiting potential upside for the Franc.

Trade idea:

USD/CHF remains bullish above 0.8020; buying dips toward 0.8040 could target 0.8100, while a break below 0.8000 would weaken the bullish setup.