USD/CHF fades rebound from weekly low above 0.9200 on mixed Fed concerns, focus on US data

• USD/CHF retreats from recent tops following a stellar bounce off weekly low.
• Fed’s Barkin renewed fears of no more rate hikes from the US central bank, US data adds strength to the concerns.
• Yield curve inversion favored buyers amid a rush to risk safety.
• Preliminary readings of US Michigan Consumer Sentiment Index, 5-year inflation expectations eyed ahead of next week’s US CPI.

USD/CHF bulls take a breather around 0.9220, after posting the biggest daily jump in one week, as traders await the key US data amid mixed feelings. The Swiss Franc (CHF) pair rallied the previous day amid the market’s rush toward the US Dollar amid fears of recession. However, a rethink about the Federal Reserve’s (Fed) next moves join softer US data to probe the pair buyers afterward.

Downbeat prints of the US Weekly Initial Jobless Claims and comments from Richmond Federal Reserve (Fed) President Thomas Barkin seemed to have weighed on the US Dollar during the initial Thursday. Also exerting downside pressure on the greenback was the optimism surrounding China and likely easing in the Sino-American tussles.

That said, the US Weekly Initial Jobless Claims rose to 196K versus 190K expected and 183K prior. “The advance number for seasonally adjusted insured unemployment during the week ending January 28 was 1,688,000, an increase of 38,000 from the previous week's revised level," said the US Department of Labor (DOL) showed on Thursday.

Further, Fed’s Barkin appeared too dovish while suggesting rate cuts as he said that it would make sense for the Fed to steer "more deliberately" from here due to lagged effects of policy. Previously, Fed Chair Jerome Powell hesitated in cheering the upbeat US jobs report and raised fears of no more hawkish moves from the US central bank.

Elsewhere, US President Joe Biden’s taming of fears emanating from the US-China jitters, following the China balloon shooting by the US, joined the hopes of People’s Bank of China’s (PBOC) rate cuts and the restart of the China-based companies’ listing on the US exchanges to favor risk-on mood during early Thursday.

Alternatively, the difference between the 10-year and 2-year Treasury bond yields turned the widest since 1980 as the former prints 3.66% and the latter came in around 4.50%. The same signaled the market’s recession fears and triggered the US Dollar run-up.

Amid these plays, Wall Street closed in the red and the US Dollar Index (DXY) recovered from the weekly low.

Looking ahead, the Swiss calendar is almost empty and hence USD/CHF traders should pay attention to the risk catalysts ahead of the preliminary readings of US consumer-centric numbers for February like the Michigan Consumer Sentiment Index and 5-year Consumer Inflation Expectations. Above all, the market’s preparations for the next week’s US Consumer Price Index (CPI) will be important to watch.

Technical analysis

USD/CHF remains on the bear’s radar unless trading successfully beyond the downward-sloping resistance line from late November 2022, close to 0.9265 by the press time.