The USD/CHF pair traded with modest gains near 0.9100 during the early European session on Friday (1/31). The hawkish stance from the US Federal Reserve (Fed) provided some support to the US Dollar (USD). Investors will take more cues from the December US Personal Consumption Expenditure (PCE) inflation data, due for release on Friday. Also, Fed Governor Michelle Bowman will be speaking.

The US central bank left interest rates unchanged on Wednesday. Fed Chair Jerome Powell said in a press conference that the US economy remains strong, while inflation remains mildly elevated. Hence, the central bank is in no hurry to adjust its policy stance. Following the Fed's January meeting, the market sees less than a 50% chance that the Fed will cut interest rates before its June meeting, according to the CME FedWatch Tool. This, in turn, boosted the Greenback against the Swiss Franc (CHF).

However, downbeat US Gross Domestic Product (GDP) data weakened the USD. The Bureau of Economic Analysis' preliminary estimate of fourth-quarter US GDP showed the US economy grew at an annualized pace of 2.3% in Q4, below the 2.6% growth expected. That was lower than the 3.1% growth seen in Q3.

A ceasefire between Israel and Hamas in Gaza came into effect a week ago. Meanwhile, a November ceasefire in Lebanon remains in place despite Israel continuing to launch airstrikes on Hezbollah targets. Investors will be closely monitoring developments surrounding geopolitical risks in the Middle East. Any signs of escalating geopolitical tensions in the region could boost safe-haven inflows, benefiting the Swiss Franc. (AL)

Source: FXstreet