USD/CHF retreats after posting more than 2% gains in the previous session, trading around 0.8430 during Asian hours on Tuesday (5/13). The decline came as the US Dollar (USD) weakened, possibly due to a technical correction.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, was trading lower near 101.50 at the time of writing. Investors now shift their focus to the upcoming US Consumer Price Index (CPI) report for April, due later today. Analysts expect the headline CPI to recover to 0.3% month-on-month from -0.1%, while the core CPI is also expected to rise to 0.3% from 0.1%. Year-on-year figures for both metrics are anticipated to remain unchanged.

The previous surge in the USD/CHF pair was driven by positive developments in the US-China trade talks. Over the weekend, the two countries reached a preliminary deal in Switzerland aimed at significantly reducing tariffs—a move seen as a potential step toward easing trade tensions. Under the deal, the US will reduce tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on US imports from 125% to 10%. The deal has boosted market sentiment and is seen as a step toward stabilizing global trade relations.

The easing trade tensions have prompted a flight to riskier assets, weighing on the safe-haven Swiss franc (CHF). Additionally, the yield on the benchmark 10-year Swiss government bond rose to near 0.37%, in line with rising global borrowing costs as investor risk appetite improves.

However, the rise in Swiss yields was capped by growing expectations of further monetary easing by the Swiss National Bank (SNB). Last week, SNB Chairman Schlegel reiterated the bank's readiness to intervene in the currency market and cut interest rates—potentially to negative—if inflation continues to run below its target. (Newsmaker23)

Source: Fxstreet