USD/CHF steadies on trade optimism, Swiss deflation pressures

• The US Dollar stabilizes against the Swiss Franc after Tuesday's rebound.
• Hopes of easing trade tensions between Washington and Beijing reduce demand for safe-haven assets.
• Persistent deflation in Switzerland continues to pressure the Swiss National Bank.

The USD/CHF pair is down 0.10% on Wednesday, trading around 0.7950 at the time of writing, after bouncing from the 0.7900 area earlier this week. The US Dollar (USD) is holding steady against the Swiss Franc (CHF) for the week so far, with markets remaining cautious ahead of the upcoming US Consumer Price Index (CPI) report and next week's Federal Reserve (Fed) monetary policy decision.

Investors reacted positively to reports that US President Donald Trump will meet Chinese President Xi Jinping later in the month in an attempt to ease trade tensions. This more optimistic tone has reduced demand for safe-haven assets, weighing on the Swiss Franc while modestly supporting the US Dollar.

However, the Greenback's upside remains limited, as markets price in a 25-basis-point interest rate cut by the Fed next week, with a further easing move likely in December. Concerns about the gradual weakening of the US labor market are offsetting inflation fears related to trade tariffs.

In Switzerland, the CHF remains soft despite a moderate improvement in the trade surplus reported this week. Consumer prices continue to show a deflationary trend, maintaining pressure on the Swiss National Bank (SNB) to consider deeper negative interest rates to support growth and prevent excessive appreciation of the Franc.

Overall, USD/CHF remains in a consolidation phase as traders adopt a cautious stance ahead of major central bank decisions and upcoming inflation indicators in both the United States and Switzerland.