USD/CHF recovers its recent losses amid a subdued US Dollar, improves to near 0.8700

• USD/CHF moves above towards the psychological level of 0.8700.
• US Dollar registers losses due to weaker US bond yields.
• Swiss Unemployment Rate (YoY) increased by 2.5% in January against the 2.3% prior.

USD/CHF recovers its losses amid a subdued US Dollar, edging higher to near 0.8700 during the early European hours on Wednesday. US Dollar (USD) faces a challenge due to lower yields on US Treasury bonds, consequently, undermining the USD/CHF pair.

US Dollar Index (DXY) continues to lose ground, inching lower to near 104.00 with the 2-year and 10-year yields on US bond notes standing at 4.39% and 4.02%, respectively, by the press time. Nevertheless, the bearish momentum of the Greenback might have been limited by the hawkish remarks from US Federal Reserve (Fed) Chair Jerome Powell. Powell alleviated market expectations of a rate cut in March and underscored the importance of closely monitoring inflation as it approaches the Fed's 2% core target.

Furthermore, Fed Bank of Cleveland President Loretta Mester remarked on Tuesday that the US central bank might consider the possibility of reducing interest rates later in the year. Meanwhile, Fed Bank of Philadelphia President Patrick Harker voiced his support for the Fed's decision to keep interest rates unchanged last week, citing an outlook suggesting ongoing declines in inflation.

Fed members Adriana D. Kugler and Thomas I. Barkin are slated to deliver speeches on Wednesday, with market participants anticipated to closely scrutinize their remarks for additional insights into the Federal Reserve's stance on monetary policy.

The non-seasonally adjusted Swiss Unemployment Rate (YoY) increased by 2.5% in January against the 2.3% prior. While seasonally adjusted Unemployment Rate (MoM) is unchanged at 2.2% as expected. Foreign Currency Reserves increased to 662 billion in January from the previous figure of 654 billion.

Projections for the current year suggest that inflation is anticipated to average below the 2.0% threshold. In light of these considerations, there is a consensus among analysts that the Swiss National Bank (SNB) may embark on its first rate cut in September 2024.