USD/CHF slides to over one-week low, below 0.9500 mark ahead of US consumer inflation

• USD/CHF turns lower for the third straight day and drops to a one-week low on Wednesday.
• Modest USD weakness exerts pressure amid growing recession fears and US-China tensions.
• Investors might refrain from placing aggressive bets and wait for the crucial US CPI report.

The USD/CHF pair attracts fresh selling near the 0.9545 region on Wednesday and turns lower for the third successive day. The pair extends the steady intraday descent through the first half of the European session and slips below the 0.9500 psychological mark, hitting a one-week low in the last hour.

The uncertainty over the Fed's rate hike path prompts some selling around the US dollar, which turns out to be a key factor exerting downward pressure on the USD/CHF pair. Investors pushed back against expectations for a more aggressive policy tightening after the New York Fed’s Survey of Consumer Expectations showed that the inflation outlook fell sharply in July. The markets, however, are still pricing in around 70% chances for a 75 bps rate hike at the September FOMC meeting.

Apart from this, the prevalent cautious mood offers some support to the safe-haven Swiss franc and further contributes to the offered tone surrounding the USD/CHF pair. The market sentiment remains fragile amid growing worries about a global economic downturn and US-China tensions over Taiwan. The downside, however, seems cushioned as traders might refrain from placing aggressive bets and prefer to wait for the US consumer inflation figures, due later during the early North American session.

The crucial US CPI report would be looked upon for fresh clues about the Fed's near-term policy outlook. This, in turn, would play a key role in influencing the USD price dynamics and help determine the next leg of a directional move for the USD/CHF pair. Hence, any subsequent decline is more likely to find decent support and stall near the 0.9470 area, or a four-month low touched on August 2.

Technical levels to watch