USD/CHF grapples to surpass 0.8900 ahead of US ISM Services PMI release

• USD/CHF treads waters to surpass the 0.8900 psychological level.
• US-China trade tension could reinforce the appeal of the safe-haven Swiss Franc (CHF).
• Investors await US PMI data, seeking fresh impetus on the inflation outlook.

USD/CHF holds ground near 0.8900 during the European session on Wednesday, treading waters to extend gains for the second successive day. The strength in the US Dollar (USD) contributes support to underpin the USD/CHF pair as investors expect the Federal Reserve (Fed) to keep interest rates at a higher level for a prolonged period.

Additionally, the financial markets are factoring in the odds for a 25 basis points (bps) interest rate hike by the end of the year 2023. This optimistic stance continues to support the US Treasury yields, bolstering the confidence of Greenback’s bulls.

The resurgence of trade tensions between the US and China could potentially reinforce the appeal of the traditional safe-haven Swiss Franc (CHF) and act as headwinds for the USD/CHF pair. US Commerce Secretary Gina Raimondo expects no revisions to the US tariffs on China, which were imposed during Trump's administration until the ongoing review by the US Treasury Office is completed.

US Dollar Index (DXY) hovers around 104.70, which measures the value of the US Dollar (USD) against the six other major currencies. The 10-year US bond yield rose to 4.25%, up by 1.66%, which underpinned the strength in the US Dollar (USD).

Investors will likely watch the upcoming economic data from the United States (US). The release of the US ISM Services PMI for August and the US S&P Global PMIs during the North American session will carry substantial importance. These data releases will supply valuable insights into the present inflation scenario in the United States and may help provide a more distinct direction for the USD/CHF currency pair.