The USD/CHF remains cautious at 0.9400 amid weak Asian markets

The Swiss Franc (CHF) pair had its first daily loss in three days while retreating from 0.9456 the day before. However, the downturn failed to extend beyond 0.9380 before posting the final inactivity.

Prior to the Federal Open Market Committee (FOMC) meeting in mid-December, the absence of significant data and events, as well as remarks from Federal Reserve (Fed) officials, restrains the market's quick movements. Also likely to have posed a difficulty to the traders were the contradictory Fed and risk appetite signals.

After last week's stronger US employment statistics and Monday's high US ISM Services PMI, the Fed hawks were challenged by the nation's disappointing trade data and the protracted drop in inflation expectations. Nevertheless, US inflation expectations, as shown by the 10-year and 5-year breakeven inflation rates according to the St. Louis Federal Reserve (FRED) data, extend the earlier retreat from a one-month high by registering a second consecutive day of decline. The latest projections for 5-year and 10-year inflation are 2.38 and 2.48 percent, respectively. The US Goods and Services Trade Balance deteriorated to $-78.2 billion, compared to $-79.1 billion anticipated and $-73.28 billion previously.

In addition, China is expected to announce additional easing to its Zero-Covid policy on Wednesday, per Reuters, which might generate a risk-on sentiment and impact on the US Dollar. The most recent action by Beijing may be related to the decline in viral infections from the record high, as well as repeated declarations indicating more opening of the second-largest economy, which has been impacted by the illness.

In contrast, gloomy economic forecasts from many US institutions and disappointing earnings weighed on market sentiment Tuesday evening. United States Heads of Goldman Sachs, Bank of America Corp, and JPMorgan Chase were among those there. In addition, Bloomberg Economics predicted for 2023 the lowest economic growth since 1993, at 2.4%.

In the midst of these plays, the S&P 500 Futures oscillate about 3,950, and the US 10-year Treasury yields cling to the 3.54% mark, despite Wall Street's and the main Treasury bonds' disappointing performances the previous day.

The China trade data and Swiss unemployment rate for November could provide USD/CHF traders with instant guidance. However, the risk catalysts will receive the most attention.

A junction of the two-week-old declining trend line and the 21-DMA near 0.9485 limits the USD/CHF's potential. However, a three-week-old downward trend line near 0.9320 limits the pair's near-term falls.