USD/CHF weakens below 0.8150 ahead of US Retail Sales release

• USD/CHF edges lower to near 0.8135 in Tuesday's early European session. 
• The ongoing conflict between Israel and Iran boosts the safe-haven flows, benefiting the Swiss Franc.
• Traders await the US May Retail Sales data on Tuesday ahead of the Fed interest rate decision. 

The USD/CHF pair softens to around 0.8135 during the early European session on Tuesday. The persistent geopolitical risks in the Middle East provide some support to the Swiss Franc (CHF) against the US Dollar (USD). Traders brace for the US Retail Sales data for May, which is due later on Tuesday. 

The conflict between Israel and Iran has entered its fifth day despite world calls for negotiation and de-escalation. Late Monday, US President Donald Trump called for the evacuation of Iran's capital Tehran, hours after urging the country's leadership to accept a deal to limit its nuclear program, even though Israel indicated that attacks would continue. Heightened geopolitical tensions in the Middle East are likely to boost the safe-haven flows, supporting the CHF in the near term. 

Nonetheless, any signs of easing geopolitical tensions might drag the CHF lower and act as a tailwind for the pair. There was some hope on Monday that the situation would not worsen when Iran reportedly asked many countries to put pressure on Israel for a ceasefire.

The US Federal Reserve (Fed) interest rate decision will take center stage on Wednesday, which is expected to keep interest rates steady at its June meeting. Futures markets expect two rate cuts by year-end, possibly beginning in September, bolstered by softer inflation data last week.

Traders will take more cues from the FOMC Press Conference. "If the Fed delivers a dovish hold as we expect, the dollar is likely to resume weakening due to the worsening fundamental backdrop in the U.S," said Win Thin, global head of markets strategy at Brown Brothers Harriman.