USD/CHF recovers early lost ground amid modest USD strength, flat-lines around 0.9065 area

The USD/CHF pair struggles to capitalize on the previous day's recovery from the 0.9000 psychological mark, or its lowest level since June 2021 and attracts some intraday sellers on Thursday. Spot prices, however, manage to reverse an intraday dip and trade just above mid-0.9000s during the early North American session, nearly unchanged for the day.

The US Dollar (USD) gains some positive traction for the second straight day and moves away from over a two-month low set on Wednesday, which, in turn, lends some support to the USD/CHF pair. The USD uptick, meanwhile, lacks bullish conviction and runs the risk of fizzling out rather quickly amid growing acceptance that slowing economic growth will force the Federal Reserve (Fed) to pause its rate-hiking cycle.

In fact, the markets are currently pricing in an even chance of a 25 bps lift-off at the upcoming FOMC monetary policy meeting in May and the possibility of rate cuts by year-end. A larger-than-expected rise in the US Weekly Initial Jobless Claims comes on the back of the disappointing release of the US ADP report on Wednesday and suggests that the Fed's efforts to cool the labor market could be having some impact.

This, in turn, reaffirms expectations the Fed is nearly done with its inflation-fighting rate-hikes and keeps the US Treasury bond yields depressed near a multi-month low, which, in turn, should act as a headwind for the buck. Furthermore, looming recession risks continues to weigh on investors' sentiment and benefit the safe-haven Swiss Franc. This might further contribute to capping the upside for the USD/CHF pair.

Traders might also refrain from placing aggressive directional bets and prefer to wait on the sidelines ahead of the release of the closely-watched US monthly jobs data on Friday. The popularly known as the NFP report will play a key role in influencing market expectations about the Fed's next policy move, which, in turn, will drive the USD demand and help investors to determine the next leg of a directional move for the USD/CHF pair.

Technical levels to watch