USD/CHF delivers a pullback to near 0.8900, downside looks likely ahead of US Retail Sales

• USD/CHF has delivered a less-confident pullback move above 0.8890, however, the downside looks solid.
• The USD Index was heavily dumped after the release of the lower-than-anticipated US PPI report.
• Monthly Retail Sales data would contract by 0.4%, at a similar pace to the prior contraction.

The USD/CHF pair has attempted a recovery in the early Asian session after refreshing a two-year low at 0.8860. A pullback move in the Swiss Franc asset to near 0.8892 is expected to remain short-lived amid the absence of any fundamental change in the condition of the US Dollar Index (DXY).

The USD Index was heavily dumped by investors on Thursday after the lower-than-anticipated United States Producer Price Index (PPI) confirmed that the Federal Reserve (Fed) will dial back rate hikes sooner. Fed chair Jerome Powell has been rigorously hiking rates since last year to bring down the stubborn inflation to desired levels. US inflation is confidently softening led by lower gasoline prices, higher rates, and now tight credit conditions. Therefore, investors are anticipating a pause in the rite-hiking spell to safeguard the economy from a severe slowdown.

Meanwhile, S&P500 futures are showing mild losses in the early Asian session after a ramp-up move on Thursday, indicating that the overall market mood is quite upbeat. Lower gasoline prices have resulted in decelerating US Producer Price Index (PPI) report. This has resulted in a decline in input costs for firms and its benefit will be observed in quarterly results, which forced investors to gung-ho for US equities.

Going forward, US Retail Sales data (March) will be of utmost importance. Monthly Retail Sales data would contract by 0.4%, at a similar pace to the prior contraction. This might bolster the need to pause rates by Fed chair Jerome Powell.

On the Swiss Franc front, investors are awaiting Swiss Producer and Import Prices (PIP) (March) figures. The economic data is expected to remain steady at -0.2% and 2.7% on a monthly and an annual basis.