USDCHF bears direct five-day downtrend towards 0.9800 with eyes on US inflation data

• USDCHF remains pressured at one-month low, down for the fifth consecutive day.
• US Dollar drops amid mixed Fedspeak, softer yields.
• Markets remain dicey as S&P 500 Future print mild gains, Asian stocks track Wall Street’s losses.
• Traders brace for a softer US CPI, a surprise can recall buyers.

USDCHF takes offers to refresh the intraday low near 0.9825 during the early hours of Thursday’s European session. In doing so, the Swiss Franc (CHF) pair prints a five-day losing streak as it approaches the lowest levels since October 06, marked the previous day.

The quote’s latest weakness could be linked to the market’s hopes of softer US inflation data for October, as well as the recently downbeat comments from the US Federal Reserve (Fed) officials.

That said, Minneapolis Federal Reserve (Fed) President Neel Kashkari recently mentioned “Some things are out of our control on inflation.” Previously, New York Federal Reserve (Fed) President John Williams mentioned that the relatively stable long-term inflation expectations are good news. On the same line, Richmond Fed President Thomas Barkin also mentioned that the Fed’s fight against inflation may lead to a downturn in the US economy but that is a risk that the Fed will have to take.

It should be noted that comments suggesting an absence of the need for aggressive rate hikes from the monetary policymakers of Australia, New Zealand and Japan also recently favored the market sentiment and weighed on the USDCHF prices. Furthermore, a slight decline in China’s covid numbers and Russia’s retreat from Kherson exerted additional downside pressure on the US Dollar.

Earlier in the week, Swiss National Bank (SNB) Chairman Thomas Jordan said, “Our monetary policy decisions are not based exclusively on our inflation forecast.” The policymaker also mentioned that they are also experimenting with machine-learning models that are trained using a large set of economic and alternative indicators.

It’s worth noting that the fears of global recession and the US political gridlock, as well as China’s covid woes, underpinned the previous day’s tepid rebound.

Against this backdrop, the US Treasury yields remain pressured while the S&P 500 futures print mild gains. Further, the Asian equities trade mixed whereas the US Dollar Index (DXY) reverse the previous day’s rebound from the two-month low.

Moving on, US Consumer Price Index (CPI) for October, expected to ease to 8.0% YoY from 8.2% prior, appears the key catalyst for the USDCHF traders amid chatters over the easy Fed rate hike in December.

Also read: US October CPI Preview: US Dollar to weaken on a CPI-inspired risk rally

Technical analysis

Unless trading successfully beyond the previous support line from late September, around 0.9890 by the press time, USDCHF remains on the way to test the six-week low near 0.9740.