The USD/CHF pair posted modest gains near 0.8990 during the early European session on Tuesday.The prospect of higher US interest rates in the longer term continues to support the greenback for now. Trading volumes are likely to thin out as the year-end approaches.

The Federal Reserve (Fed) projections outlined a slower pace of interest rate cuts than traders had expected, supporting the US Dollar (USD).

The Summary of Economic Projections, or ‘dot-plot', indicated a half-percentage-point rate cut in 2025, compared to a full percentage point cut projected in September.

Data released by the Census Bureau on Monday showed that US New Home Sales jumped 5.9% to a seasonally adjusted annual rate of 664,000 in November.

The October reading was revised higher to 627,000 units from the previously reported 610,000 units. Additionally, US Durable Goods Orders fell 1.1% in November to $285.1 billion, following a 0.8% increase reported in October, weaker than the expected 0.4% decline.

On the Swiss side, traders will be closely monitoring developments surrounding rising geopolitical tensions in the Middle East.

Any sign of geopolitical risk could boost safe-haven currencies such as the Swiss Franc (CHF) and act as a headwind for USD/CHF.

Israel's defense minister has confirmed that Israel killed Hamas political leader Ismail Haniyeh in Tehran in July and warned that the military would also "decapitate" the head of Yemen's Houthi rebels, according to the BBC.

On the other hand, Israeli Prime Minister Benjamin Netanyahu said some progress had been made toward a ceasefire deal in Gaza with Hamas, but he could not provide a timeline for when the deal would be reached.

Source: FXStreet