The USD/CHF pair attracted fresh sellers during the Asian session on Wednesday and eroded a major part of the previous day's modest recovery move. The spot prices fell back to mid-0.8100s in the last hour and remained within striking distance of a ten-year low touched last Friday amid a broadly weaker US Dollar (USD).

In fact, the USD Index (DXY), which tracks the greenback against a basket of currencies, languished near its lowest level since April 2022 amid weakening confidence in the US economy. Further, bets that the Federal Reserve (Fed) will soon resume its interest rate-cutting cycle and lower borrowing costs by 100 basis points by 2025 continued to dent the greenback's appeal. This, in turn, was seen as a key factor exerting downward pressure on the USD/CHF pair.

Meanwhile, the initial market reaction to US President Donald Trump's decision last week to halt broad reciprocal tariffs for 90 days turned out to be short-lived amid concerns over a US recession and an escalating US-China trade war. Moreover, Trump's rapidly changing stance on trade tariffs fueled uncertainty and weighed on investor sentiment. This benefitted the safe-haven Swiss Franc (CHF) and contributed to the offered tone surrounding the USD/CHF pair.

The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside and supports prospects for an extension of the three-month-long downtrend, from this year's highs touched in January. However, traders might opt ​​to wait for Fed Chair Jerome Powell's speech later during the US session for cues on the path of rate cuts. In the meantime, the US Retail Sales data might influence the USD and the USD/CHF pair. (Newsmaker23)

Source: FXstreet