USD/CHF drifts higher above 0.8000 as US ISM Manufacturing PMI looms

• USD/CHF trades in positive territory near 0.8010 in Tuesday's early European session. 
• The pair gains ground amid a firmer US Dollar, but the Fed's dovish tone might cap its upside. 
• The Swiss Real Retail Sales and US August ISM Manufacturing PMI will be the highlights later on Tuesday. 

The USD/CHF pair edges higher to around 0.8015 during the early European session on Tuesday, bolstered by a modest rebound in US Dollar (USD). Nonetheless, potential upside for the pair might be limited amid rising bets of the US Federal Reserve (Fed) rate cut. Traders will take more cues from the Swiss Real Retail Sales and US ISM Manufacturing Purchasing Managers Index (PMI) for August later on Tuesday.

The Fed is expected to deliver a rate cut in the September meeting after maintaining its rates for nine months. Fed Chair Jerome Powell signalled a possible interest rate cut at the US central bank's meeting in September, saying that risks to the job market were rising. 

Meanwhile, Fed Governor Christopher Waller noted that he would support a rate reduction in the September meeting and further reductions over the next three to six months to prevent the labor market from collapsing. Traders are currently pricing in a 90% odds of a 25-basis-point Fed rate cut on September 17, according to the CME FedWatch tool.

On the Swiss front, ongoing geopolitical tensions between Russia and Ukraine could boost safe-haven flows and support the Swiss Franc (CHF). Russian drone attacks on power facilities in northern and southern Ukraine on Sunday left nearly 60,000 customers without electricity, per the Guardian. Ukrainian President Volodymyr Zelenskyy vowed to retaliate by ordering more strikes deep inside Russia.