USD/CHF holds steady above 0.9100 as cooling US inflation keeps Fed on track for rate cuts

• USD/CHF flat lines near 0.9125 in Thursday's early European session.
• Softer US CPI inflation sparks speculation about future Fed rate cuts. 
• The uncertainties and geopolitical risks could boost the safe-haven currency like the CHF. 

The USD/CHF pair trades on a flat note around 0.9125 during the early European trading hours on Thursday. The Greenback struggles to gain ground after cooler US inflation data heightens the expectations of potential Federal Reserve (Fed) rate cuts. Traders await the US December Retail Sales and weekly Initial Jobless Claims, which will be published later on Thursday.

The Bureau of Labor Statistics revealed on Thursday that the US Consumer Price Index (CPI) climbed 2.9% YoY in December versus 2.7% prior. This reading was in line with forecasts. Meanwhile, the US core CPI, which excludes volatile food and energy prices, rose 3.2% YoY in December, slightly softer than the 3.3% expected. 

Futures pricing continued to imply a near certainty that the Fed would hold the interest rate steady at its January 28-29 meeting but priced in a nearly 50% chance of two rate cuts through the year, according to the CME FedWatch tool. The markets anticipate the next reductions likely will happen in May or June.

Israel and Hamas have agreed to a deal that will pause the war in Gaza following 15 months of war. The agreement would come into effect on Sunday so long as it was approved by the Israeli cabinet, per CNN. Investors will closely monitor the development surrounding the geopolitical risks. Any signs of escalating tensions in the Middle East could boost the safe-haven flows, benefiting the Swiss Franc (CHF).