The USD/CHF pair struggled to capitalize on the previous day's modest bounce from the 0.9035-0.9030 region, or above two-week lows and oscillated in a narrow range during the Asian session on Thursday (23/1). The spot price is currently trading around the 0.9060 region, nearly unchanged for the day amid a subdued US Dollar (USD) price action.

The USD Index (DXY), which tracks the greenback against a basket of currencies, struggled to capitalize on the overnight bounce from monthly lows amid bets that the Federal Reserve (Fed) will cut interest rates twice this year. That said, a pickup in the US Treasury bond yields acted as a tailwind for the greenback, which, in turn, was seen lending some support to the USD/CHF pair. Meanwhile, ultra-dovish comments from Swiss National Bank (SNB) Chairman Martin Schlegel, who opened the door to negative interest rates, might continue to weigh on the Swiss Franc. Additionally, the underlying bullish tone surrounding the equity markets could undermine the safe-haven CHF and further contribute towards limiting any meaningful downside for the USD/CHF pair.

Traders also seemed reluctant and might prefer to wait on the sidelines ahead of US President Donald Trump's speech at the World Economic Forum for a more concrete announcement on tariffs. This, in turn, could introduce volatility across the global financial markets and influence the USD price dynamics, which in turn, should provide some meaningful impetus to the USD/CHF pair.

Traders on Thursday will next take cues from the release of US Weekly Initial Jobless Claims data, due later during the early North-American session. That said, the aforementioned fundamental backdrop warrants some caution before positioning for an extension of the recent pullback from the 0.9200 mark, or the highest level since May 2024 touched earlier this month. (AL)

Source: FXstreet