USD/CHF Slides as US Dollar Weakens, Approaches 0.8730 Level

During the early hours of Monday’s European session, USD/CHF is seen retreating to around 0.8730. This downward movement in the pair is primarily attributed to the weakening of the US Dollar (USD). Despite hawkish comments from Federal Reserve (Fed) officials, the USD is under pressure due to prevailing risk-on sentiment in the market.

Dallas Federal Reserve (Fed) Bank President Lorie Logan’s recent statement that there is no immediate need to lower interest rates has failed to lift the USD. Logan emphasized the importance of gathering more evidence to confirm the sustainability of progress in inflation.

As US Treasury yields decline, the USD faces further headwinds. The US Dollar Index (DXY) has slid to around 104.00, with 2-year and 10-year US yields hovering at 4.47% and 4.16%, respectively.

Market attention is now focused on the upcoming release of Consumer Price Index (CPI) data scheduled for Tuesday. Analysts expect a decrease in January’s CPI (Year-on-Year) to 3.0%, down from December’s 3.4%. Additionally, the monthly CPI data is anticipated to ease to 0.2% from the previous reading of 0.3%.

In Switzerland, January saw an increase in the non-seasonally adjusted Swiss Unemployment Rate (Year-on-Year), while the seasonally adjusted rate (Month-on-Month) remained stable. The Swiss National Bank (SNB) has opted to maintain its key interest rate at 1.75%, signaling the end of its recent tightening cycle.

Market participants eagerly await the release of Swiss Consumer Price Index (CPI) data for January, also scheduled for Tuesday. Projections suggest that headline Swiss inflation could grow by 1.6%, slightly lower than the previous growth of 1.7%. Analysts widely anticipate that the SNB might initiate its first rate cut in September 2024.

USD/CHF: ADDITIONAL IMPORTANT LEVELS