USD/CHF prints five-day downtrend near 0.9500 ahead of US inflation

• USD/CHF holds lower ground at the lowest levels since August 18.
• Downbeat Swiss data fails to impress buyers amid broad DXY weakness.
• Pullback in yields, cautious optimism adds strength to the bearish bias ahead of the key US CPI for August.

USD/CHF stays defensive at the three-week low, down for the fifth consecutive day, as the pair traders await the key US inflation data during early Tuesday in Europe. The Swiss currency (CHF) pair’s latest weakness could also be linked to the market’s cautious optimism, as well as mixed data from Switzerland.

Swiss Producer and Import Prices reprinted -0.1% MoM figures for August versus 0.6% market expectations. The yearly numbers, however, dropped to 5.5% YoY compared to the 5.7% forecasts and 6.3% previous readouts.

Elsewhere, the US Dollar Index (DXY) remains pressured around a 12-day low, down 0.20% intraday near 108.10 at the latest, as firmer sentiment and hopes of a softer US Consumer Price Index (CPI) favor the greenback sellers. In doing so, the greenback bears ignore the latest hawkish rhetoric from the Fed policymakers and the geopolitical/trade fears concerning China and Russia.

The reason could be linked to a pullback in the US Treasury yields from the multi-day high, as well as hopes of more stimulus and an absence of the Fed policymakers’ speeches due to the fortnight-long blackout ahead of next week’s monetary policy meeting.

That said, the US 10-year Treasury yields retreat from a three-month high, down three basis points (bps) to 3.33%. Even so, S&P 500 Futures and the stocks in the Asia-Pacific zone print mixed performance, despite posting mild gains by the press time. It should be noted that the US two-year Treasury yields snap a three-day uptrend as they ease from the highest levels since late 2007, down 0.87% percent to near 3.543% at the latest.

It should be observed that the return of China from the long weekend and the European policymakers’ hopes of overcoming the recession woes are likely additional negatives for the USD/CHF pair.

Moving on, the US Consumer Price Index (CPI) data for August, expected to ease to -0.1% MoM versus 0.0% prior, will be important for the pair traders. Should the inflation numbers print softer data, the USD/CHF pair may witness further downside.

Technical analysis

Unless crossing the weekly resistance line, near 0.9580 at the latest, the USD/CHF pair stays on the way to mark another attempt in conquering the 200-DMA support, around 0.9475 by the press time.