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Since your wife is having severe itching which responds to cortisone it might not be psychological. Or rather it is bit premature to term it psychological.
The most likely and most common cause is an allergic dermatological reaction to a external antigen (such as metals, pollens , dust, food etc). So as a first step what you should do is to remove and replace any new item that she might come in contact in that particular time period. Also analyse the dinner (any new ingredient ? any new utensils ?) . Change your bed and pillow cover.
Instead of the cortisone cream she can take a OTC anti allergic medication like Allegra once a day around 7-8pm in the night. Her symptoms should resolve in 2-3 days. After 2-3 days stop the medication and see whether this is recurring. If so she will require a basic panel blood tests and dermatological evaluation.
Hope this helps
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