The USD/CHF pair is pulling back from the monthly high reached yesterday. This retreat is driven by a technical correction following a strong upward move.

The U.S. Dollar Index, which reflects the dollar's value against a basket of six major currencies, is currently trading around 101.50. Investors are focusing on the upcoming Consumer Price Index (CPI) report for April, due later today. Analysts forecast the headline CPI to rise to 0.3% month-over-month from -0.1%, while core CPI is also expected to increase to 0.3% from 0.1%. Year-over-year figures are projected to remain unchanged.

The earlier rise in USD/CHF was supported by positive news regarding U.S.-China trade negotiations. A preliminary agreement on a significant tariff reduction — to 30% by the U.S. and to 10% by China — boosted market sentiment and strengthened the dollar. These developments reduced demand for the safe-haven Swiss franc, signaling increased risk appetite. Additionally, the yield on 10-year Swiss government bonds climbed to nearly 0.37%.

However, the rise in Swiss bond yields is constrained by expectations of further monetary policy easing from the Swiss National Bank (SNB). Last week, SNB Vice Chairman Martin Schlegel warned that if inflation continues to fall short of target, the central bank could intervene in the foreign exchange market and potentially lower interest rates — even into negative territory.

Overall, the current dynamics reflect a balance between optimistic trade signals and expectations around monetary policy. Strong CPI data could push the USD/CHF pair higher, while in the absence of surprises, the market may continue to fluctuate near current levels.

From a technical perspective, the Relative Strength Index (RSI) on the daily chart has just begun to build positive momentum, supporting a bullish outlook for the pair.