USD/CHF defends 0.9100 despite risk-off mood, focus on US inflation

• USD/CHF bears take a pause following the biggest daily fall in a week.
• Risk appetite weakens amid reflation fears, US stimulus headlines.
• US Treasury yields seesaw around six-week low, DXY stays pressured.
• US CPI becomes the key concern as Fedspeak rejects ‘transitory’ concerns.

USD/CHF picks up bids to refresh intraday high near 0.9115, consolidating the previous day’s losses during early Wednesday. The Swiss currency (CHF) pair seems to track the consolidation in the US Treasury yields to lick Tuesday’s wounds ahead of the key US inflation numbers for October.

On Tuesday, the risk-off mood weighed on the US Treasury yields and the US Dollar Index (DXY) but the bulls have recently been cautious amid slightly positive headlines over US stimulus, as well as expectations of two Fed rate hikes in 2022. That said, the DXY dropped for three consecutive days in the last before recently taking rounds to 93.95.

White House Economic Advisor Brian Deese expects a vote in the House next week on the larger social infrastructure package, per tweets from Fox Business reporter Edward Lawrence. “He says some House members will receive more information about how the bill will not add to the debt by the end of this week,” adds Fox’s Lawrence.

On a different page, US Treasury Secretary Janet Yellen crossed wires via NPR Marketplace interview while warning of a recession if the debt limit is not raised. The policymaker also said, “The Federal Reserve will not allow 1970s-style inflation to return.”

It’s worth noting that St. Louis Federal Reserve President James Bullard told, per the CNBC, “Currently expecting the US central bank to hike its benchmark rate twice in 2022, after it’s finished with winding down its bond-buying program.”

It should be noted that Fed Chairman Jerome Powell’s comments, published the previous day, tried to tame the inflation fears but couldn’t. Also challenging the market sentiment is the anxiety over Fed reshuffle and indecision concerning the US stimulus, as well as Sino-American leaders’ virtual meeting next week.

Against this backdrop, US 10-year Treasury yields rise 1.2 basis points (bps) to 1.46% while the S&P 500 Futures drop 0.17% intraday by the press time.

Looking forward, US inflation figures become the key catalyst for the USD/CHF traders as firmer price pressure leads to faster rolling back of the Fed’s easy money, which in turn can help the quote to pare recent losses.

Read: US October CPI preview: Inflation data unlikely to discourage gold bulls

Technical analysis

The monthly resistance line precedes the 200-DMA, respectively around 0.9130 and 0.9160, to restrict short-term up-moves of the USD/CHF prices. With the bearish MACD signals and the pair’s sustained trading below the stated resistances, the quote is likely declining towards the monthly low near 0.9090.