USD/CHF marches towards 0.9200 as US dollar licks its wounds, Swiss inflation, US NFP eyed

• USD/CHF extends Friday’s recovery from three-week low on DXY’s rebounds.
• Market sentiment sours on OPEC+ surprise output cut, cautious mood ahead of top tier data/events.
• Swiss CPI, US NFP will be the key, PMIs are also important to watch for clear directions.

USD/CHF picks up bids to renew intraday high around 0.9170 as it extends the previous day’s upside while consolidating the two-week downtrend during early Monday. In doing so, the Swiss Franc (CHF) pair justifies the market’s risk-off mood ahead of the key data/events amid fears of an additional toll on the global growth, mainly after the oil output cut from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+.

After multiple days of optimism, market sentiment sours during early Monday as an output cut from the global oil producers propels the odds of higher inflation and an additional burden on the economy, suggesting more chances of witnessing a recession. It’s worth noting that the cautious mood ahead of the Swiss Consumer Price Index (CPI) for March and the US Nonfarm Payrolls (NFP) for the said month also weigh on the risk appetite and fuel the USD/CHF prices.

It’s worth noting, however, that the receding hawkish bets on the Federal Reserve (Fed), especially after the previous week’s downbeat data, join the easing fears of the banking crisis to challenge the US Dollar bulls ahead of the key US jobs report.

As per the latest data, the US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, for February declined to 4.6% YoY from 4.7% expected and prior. On a monthly basis, Core PCE inflation rose 0.3% while easing below the market expectation of 0.4% and a downwardly revised 0.5% previous reading. Further, the Chicago PMI reading for March came in stronger than expected at 43.8 while the final readings of the University of Michigan's (UoM) Consumer Confidence Index dropped to 62.0 in March, versus 63.4 flash estimations and 63.2 market forecasts. Additionally, Current Economic Conditions fell from 70.7 in February to 66.3 and the Index of Consumer Expectations declined from 64.7 to 59.2.

Amid these plays, S&P 500 Futures print mild losses despite the firmer closing of Wall Street while the US Treasury bond yields pause the three-day downtrend.

Moving on, the Swiss CPI and SVME Purchasing Managers’ Index for March will precede the US ISM Manufacturing PMI for the said month to direct intraday moves of the USD/CHF pair. However, major attention should be given to the risk catalysts and Friday’s US jobs report for a clear guide.

Technical analysis

A one-month-old descending resistance line, around 0.9180 by the press time, challenges USD/CHF bulls even if MACD and RSI suggest that the bears are running out of steam.