USD/CHF bears approach multi-month low near 0.9000 as US inflation, Fed Minutes loom

• USD/CHF remains pressured towards the lowest levels since June 2021 after falling the most in a week the previous day.
• Broad US Dollar weakness, cautious optimism in the markets keeps Swiss Franc pair on bear’s radar.
• US CPI for March, FOMC Minutes will be eyed closely amid recently mixed Fed talks.

USD/CHF slides to 0.9030 as bears keep the reins for the second consecutive day early Wednesday, after posting the biggest daily fall in a week the previous day. In doing so, the Swiss Franc (CHF) pair cheers the broad US Dollar weakness ahead of the key catalysts while declining towards the 22-month low marked the last week.

US Dollar Index (DXY) snapped a four-day uptrend to drop to 102.15 the previous day, around the same price by the press time, as mixed Federal Reserve (Fed) comments raised doubts on the US central bank’s hawkish moves as the US inflation data and Fed Minutes loom.

That said, Philadelphia Fed President Patrick Harker said on Tuesday that the Federal Reserve will continue to look closely at available data to determine what, if any, additional actions they may need to take. Before him, Federal Reserve (Fed) Bank of New York President John Williams said that if inflation comes down, we will have to lower rates. Furthermore, Chicago Fed President Austan Goolsbee, said on Tuesday that they need to be cautious about raising interest rates after recent development in the banking sector.

It’s worth noting, however, that comments from the International Monetary Fund (IMF) seem to prod the US Dollar as the global lender flags economic fears but supports the fight against inflation. “The International Monetary Fund warned on Tuesday that lurking financial system vulnerabilities could erupt into a new crisis and slam global growth this year, but urged member countries to keep tightening monetary policy to fight persistently high inflation,” said Reuters.

On Tuesday, the IMF revised down global real Gross Domestic Product (GDP) growth forecast for 2023 to 2.8% from 2.9% in January's report. "IMF forecasts 2023 US growth at 1.6% vs 1.4% in January; 2024 growth seen at 1.1%,” mentioned Reuters.

Against this backdrop, Wall Street closed with minor gains and the yields also marked a mild run-up while the CME’s FedWatch Tool signals a 64% chance of a 0.25% Fed rate hike in May versus 72.0% a day before.

Moving forward, USD/CHF may keep cheering the US Dollar weakness with eyes on the multi-month low. However, the pace of the fall may ease ahead of the US Consumer Price Index (CPI) for March and the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting.

Also read: US CPI Preview: US Dollar on the back foot and poised to fall further

Technical analysis

Unless providing a successful break of a five-week-old descending resistance line, around 0.9085, the USD/CHF pair is well set to test the June 2021 low of around 0.8925.