USD/CHF bears approach 0.9325 support with eyes on central banks, inflation

USD/CHF prints a four-day downtrend as sellers poke the lowest levels in eight months around 0.9325, marked the last Friday. That said, the Swiss Franc (CHF) pair remains pressured around 0.9335 during early the early Asian session.

The quote’s latest losses could be largely linked to the broad-based US Dollar weakness ahead of the next week’s busy schedule comprising the Federal Reserve (Fed) monetary policy meeting and the inflation data, not to forget today’s consumer-centric figures. In doing so, the major currency pair ignores challenges to the sentiment emanating from China and Russia, as well as fears of the global recession.

US Dollar Index (DXY) prints a three-day downtrend near 104.60, down 0.22% intraday while tracing downbeat US Treasury yields and justifying the softer US data printed of late. On Thursday, US Initial Jobless Claims matched 230K market consensus for the week ended on December 02, versus the upwardly revised 226K prior. Further, the four-week average also printed 230K figure compared to 229K in previous readings. Earlier in the week, the US Goods and Services Trade Balance deteriorated to $-78.2 billion versus $-79.1 billion expected and $-73.28 billion prior. Further, the final readings of the Unit Labour for Q3 eased to 2.4% QoQ versus 3.5% first estimations.

Talking about the risk catalysts, Organisation for Economic Co-operation and Development (OECD) Head Mathias Hubert Paul Cormann joined World Trade Organization (WTO) Director Dr. Ngozi Okonjo-Iweala to highlight the risk of the global recession. On the same line is China’s Premier Li Keqiang. However, US Treasury Secretary Janet Yellen’s rejection of recession woes and hawkish expectations from the Fed fails to underpin the DXY rebound. US Treasury Secretary Yellen said on Thursday night that "Recession is not inevitable," while also declining to say whether the dollar had peaked against other currencies.

Elsewhere, news from the Wall Street Journal (WSJ), suggesting the US readiness for human rights sanctions on Russia and China, recently weighed on the market’s risk appetite. However, the previous headlines signaling China’s interest in rebuilding ties with the US and easing the Zero-Covid policy tried to defend the optimists.

The mixed mood could be witnessed in mildly bid S&P 500 Futures and downbeat US Treasury yields, as well as slightly positive commodities, which in turn weigh on the US Dollar.

Moving on, the USD/CHF pair traders should pay attention to the preliminary readings of the Michigan Consumer Sentiment Index for December, expected 53.3 versus 56.8 prior, for fresh impulse. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for the said month, 3.0% previous readings. Above all, next week’s monetary policy meeting by the Swiss National Bank (SNB) and the Federal Open Market Committee (FOMC) will be crucial for the pair traders to follow.

Technical analysis

A daily closing below the monthly bottom surrounding 0.9325 becomes necessary for the USD/CHF bears to keep the reins and approach March 2022 low near 0.9195.