USD/CHF drops towards 0.9200 as US Dollar extends pullback from monthly high on mixed Fed talks

• USD/CHF takes offers to refresh intraday low, down for the second consecutive day.
• Fed Chair Powell’s hesitance in praising strong US NFP suggests no more than two rate hikes which are already known.
• Mixed signals surrounding US-China tussles, pullback in yields underpin bearish bias.
• US President Joe Biden’s SOTU eyed for fresh impulse.

USD/CHF holds lower grounds near 0.9215, refreshing the intraday low, as the Swiss currency pair cheers broad US Dollar weakness amid Wednesday’s sluggish Asian session. In doing so, the quote drops for the second consecutive day, despite marking minor losses of late.

That said, the US Dollar Index (DXY) prints mild losses near 103.30 as it stretches the previous day’s retreat from the monthly high. In doing so, the greenback’s gauge versus the six major currencies tracks downbeat US Treasury yields amid mixed signals from the Federal Reserve officials.

US 10-year Treasury bond yields snap a three-day uptrend while retreating from a one-month high of around 3.68% to 3.67% by the press time. It should be noted that Minneapolis Federal Reserve (Fed) President Neel Kashkari told CNN on Tuesday, "We may have to hold rates at a higher level for longer," while adding that he is not forecasting a recession. Fed’s Powell showed hesitance in praising the latest jump in the US Nonfarm Payrolls (NFP) during the appearance on Tuesday when asked about the job growth of being a force to the Fed's benchmark interest rate higher than the 5% to 5.25% range currently anticipated. The same suggests a pause in the Fed rate after currently priced-in two rate hikes worth 0.25%.

Alternatively, mixed earnings reports and fresh fears emanating from China seem to weigh on the mood and put a floor under the USD/CHF prices. On Monday, US President Joe Biden tried placating the fears of another round of Sino-American tussles by saying, “The balloon incident does not weaken US-China relations.” However, China’s rejection of the Pentagon’s request keeps the geopolitical tension high and teases US Dollar buyers. “China has declined a US request for a phone call between US Defense Secretary Lloyd Austin and Chinese Defense Minister Wei Fenghe,” a Pentagon spokesman said on Tuesday reported Reuters.

Amid these plays, S&P 500 Futures fail to track Wall Street’s gains while stocks in the Asia-Pacific bloc remain indecisive as traders await US President Biden’s State of the Union (SOTU) speech.

Technical analysis

An 11-week-old resistance line, near 0.9280 by the press time, directs USD/CHF prices towards the south.