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USD/CHF maintains gains above 0.9300 amid a risk-on market sentiment
Despite optimistic market attitude, USD/CHF is defending the key support level of 0.9300. The S&P500 reacted positively to a decrease in the US PCE index because weaker demand will lead to lower costs from manufacturers. The US Dollar Index (DXY) is trading choppy at 104.00 and is exhibiting signs of decreasing volatility.
In the early Asian session, the USD/CHF pair has carried forward Friday's erratic movement in a range of 0.9310-0.9330. Despite favorable market mood in the FX universe, the Swiss franc asset maintains the critical support at 0.9300. At the time of publication, the major recognized obstacles while attempting to surpass the crucial hurdle of 0.9330.
After a decrease in the Federal Reserve's (Fed) preferred inflation measure, the S&P500 saw a robust recovery on Friday, indicating a healthy risk profile. The headline Personal Consumption Expenditure (PCE)-Price Index for the United States remained higher than expected at 5.5%, although notably lower than the previous release of 6.1%. A decrease in household consumption expenditure has further reduced inflationary expectations.
In the meantime, the US Dollar Index (DXY) is trading erratically around 104.00 and is exhibiting signs of volatility contraction. The USD Index is anticipated to stay range-bound for the foreseeable future as a result of the holiday-induced decline in market activity. In early trading, rates on 10-year US Treasuries had fallen marginally below 3.75 percent.
A subsequent drop in the demand for durable goods in the United States has also bolstered estimates of a future decline in the US Consumer Price Index (CPI). The economic statistics decreased by 2.1% compared to predictions of a 0.6% decrease. A fall in demand for durable products will push producers to reduce prices in order to preserve equilibrium, resulting in a future decline in inflation.
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