USDCHF finds immediate support near 0.9400, bears still hopeful amid bullish risk tone

• USDCHF has sensed support around 0.9400 amid an upbeat market mood.
• Fed policymaker sees no slowdown in a rate hike until there is strong evidence that inflation is falling.
• The US Retail Sales data is seen higher at 0.9% despite a decline in the inflation rate.

The USDCHF pair has displayed a pullback move after declining to near the round-level support of 0.9400 in the early Asian session. The pullback move seems short-lived as positive risk sentiment is still solid. Therefore, the market participants will attempt additions in their shorts to capitalize on a bargain sell.

The US dollar index (DXY) has also displayed a minor pullback move to near 106.70 after recording a fresh three-month low at 106.28. The downside risks for the mighty DXY are open as chances for exhaustion in the current pace of rate elevation by the Federal Reserve (Fed) are escalating. As per the CME FedWatch tool, the chances of a fifth consecutive 75 basis point (bps) rate hike stand at 17%.

Contrary to that, Federal Reserve (Fed) Governor Christopher Waller crossed the wires and said Friday’s inflation report was “just one data point,” and that markets are “way out in front”. Fed policymaker cited that a decline in good prices along with some moderation in services is positive for the economy, however, rates will not fall until there is “clear, strong evidence” inflation is falling.   

Also, economists at Danske Bank are of the view that price pressures in the US are set to persist. “While markets have reacted very positively to the October CPI print, we continue to see further risks of more persistent inflation and think it is too early to trade a clear Fed pivot.”

This week, the US Retail Sales data will hog the limelight. The economic catalyst is seen at 0.9%, higher than the prior release of 0%, which indicates that the retail demand is returning.

On the Swiss front, investors will keep an eye on developments ahead of the last monetary policy by the Swiss National Bank (SNB), scheduled in December. SNB Chairman Thomas J. Jordan may continue its rate hike spell amid rising inflation rates.