USD/CHF extends recovery above 0.9550 as DXY eyes a rebound, US ISM PMI in focus

• USD/CHF is inching higher after extending its recovery as DXY attempts a rebound.
• A decline in the US core PCE Price Index has resulted in a significant fall in the DXY.
• The improved Swiss Real Retail Sales have failed to support the Swiss franc bulls.

The USD/CHF pair has witnessed a modest rebound after hitting a low of 0.9535 in the New York session. The asset has successfully defended the responsive buying action recorded on Wednesday as the US dollar index (DXY) is eyeing a rebound after displaying a significant fall on Thursday.

The DXY witnessed a vertical downside move after attempting to renew its 23-year high at 105.78. The asset is trying to hold itself around 104.70 and may attempt a rebound amid its broader strength. A significant fall in the DXY is backed by an in-line rerelease of the US core Personal Consumption Expenditures (PCE) Price Index.

It is worth noting that the critical indicator of price levels has been advancing for the past few months and a minor slippage from the prior release of 4.9% indicates that the policy tightening measures have started showing their impact. However, the odds of a consecutive rate hike by 75 basis points (bps) are intact as the inflation rate at 8.6% is still more than four times higher than the desired rate of 2%.

In today’s session, investors’ focus will remain on the release of the US ISM PMI. As per the market consensus, the economic data may slip to 55 from the prior release of 56.1.

On the Swiss franc front, the release of the improved Real Retail Sales data has failed to provide any support to the Swiss franc bulls. The economic data released at -1.6%, higher than the prior print of -5.5% but lower than the estimates of 3.8%.