USD/CHF holds gains above 0.9300 despite the risk-on market mood

• USD/CHF is defending the critical support of 0.9300 despite positive market sentiment.
• S&P500 cheered a decline in the US PCE index as lower demand will be followed by lower prices by manufacturers.
• The US Dollar Index (DXY) is trading choppy around 104.00 and is showing signs of volatility contraction.

The USD/CHF pair has carry-forwarded its Friday’s topsy-turvy movement in a range of 0.9310-0.9330 in the early Asian session. The Swiss franc asset is holding the crucial support of 0.9300 despite positive market sentiment in the FX universe. At the press time, the major sensed barricades while attempting to cross the critical hurdle of 0.9330.

The risk profile seems solid as the S&P500 delivered a decent recovery on Friday after a decline in Federal Reserve (Fed)’s preferred inflation tool. The United States headline Personal Consumption Expenditure (PCE)-Price Index remained higher than anticipated at 5.5% but significantly lower than the former release of 6.1%. A decline in consumption expenditure by households has trimmed inflation expectations further.

Meanwhile, the US Dollar Index (DXY) is trading choppy around 104.00, and is showing signs of volatility contraction. The USD Index is expected to remain sideways further amid less trading activity due to the holiday mood in the global market. The 10-year US Treasury yields have dropped marginally below 3.75% in early trade.

A follow-up decline in the demand for United States Durable Goods has also infused strength in expectations of a further decline in the US Consumer Price Index (CPI) ahead. The economic data was contracted by 2.1% against the expectations of a 0.6% contraction. A decline in durable goods demand will force manufacturers to shift prices lower in order to maintain the equilibrium, which will result in a further decline in inflation ahead.