• USD/CHF trades flat around 0.8655 in Thursday’s early European session.
• The US CPI inflation eased to 2.9% in July, the smallest increase since March 2021. 
• The rising Middle East geopolitical tensions might boost the safe-haven flows, benefiting the CHF. 

The USD/CHF pair trades on a flat note near 0.8655 during the early European session on Thursday. Traders might prefer to wait on the sidelines ahead of the top-tier US economic data on Thursday. Meanwhile, the USD Index (DXY), a measure of the value of the US Dollar relative to a basket of foreign currencies, currently trades around 102.55, losing 0.05% on the day. 

The US Consumer Price Index (CPI) inflation report indicated that price pressures are on track to return to the Federal Reserve (Fed) 2% target. However, the expectation of a deeper rate cut from the Fed has eased. According to the CME FedWatch Tool, financial markets are now pricing in nearly 41% odds of a 50 basis points (bps) rate cut by the Fed in September, down from 50% prior to the release of US CPI data.  

Atlanta Fed President Raphael Bostic said on Tuesday he wanted to see more evidence before supporting lower interest rates. Meanwhile, Chicago Fed President Austan Goolsbee noted on Wednesday that he becomes more worried about the labor market than inflation due to the recent progress on price pressures and weak employment data.