USD/CHF retreats to 0.9350 amid cautious mood ahead of US inflation

USD/CHF struggles to extend the previous day’s recovery while taking rounds to 0.9360-50 during early Tuesday. In doing so, the Swiss Franc (CHF) pair portrays the market’s anxiety ahead of the key US Consumer Price Index (CPI), especially when the early signals for the data flash mixed lights.

On Monday, the New York Federal Reserve’s (Fed) Survey of Consumer Inflation Expectations Survey stated that the 1-year ahead inflation expectations slumped to their lowest level since 2021 and marked the biggest month-to-month decline in November. It’s worth observing that the last week’s downbeat prints of the United States Producer Price Index (PPI) also hinted at softer US inflation. Still, the University of Michigan’s (UoM) Consumer Sentiment Index, the US ISM Services PMI and inflation expectations from the UoM Survey suggested firmer prints of the US CPI. As a result, the USD/CHF traders remain off the table amid mixed signals for the essential United States inflation release.

Also likely to have challenged the USD/CHF traders could be the recently mixed signals from China and Russia. Chinese Foreign Ministry spokesman Wang Wenbin conveyed dislike for the US sanctions on two of their diplomats on Monday.  “These illegal sanctions severely affected Sino-American relations,” Wang said, per Reuters. Elsewhere, Russian President Vladimir Putin’s rejection to supply oil to countries respecting the Europe-led price cap also raised the market’s fears. It exerted downside pressure on the USD/CHF price.

The market’s indecision favored the benchmark 10-year US Treasury bond yields rose three basis points (bps) to 3.61%, but Wall Street also closed in greed and tried to challenge the USD/CHF buyers by the end of Monday’s North American session.

Moving on, the early signals for the US CPI for November hint at a softer print of 7.3% YoY, versus 7.7% prior figure, while the monthly CPI is likely to ease to 0.3% compared to 0.4% previous readings. It should be noted that the CPI ex Food & Energy appears to be the key and is expected to be unchanged at 0.3% MoM, which can surprise the USD/CHF traders in case of a firmer print. Additionally notable is the fact that the firmer inflation data can push the Federal Open Market Committee (FOMC) members to stay away from the bearish bias and defend the latest rate hikes, which could signal more upside for the USD/CHF.

Technical analysis

A two-week-old resistance line near 0.9370 restricts the immediate upside of the USD/CHF pair, directing the quote towards the recently flashed multi-day low near 0.9310.