Ella 
In early European trading on Tuesday, USD/CHF hovered around 0.8910, struggling to recover from the previous day’s decline before the release of the US Consumer Price Index (CPI). The pair is under downward pressure due to weakness in the US dollar on Monday.
In addition, USD/CHF struggled mainly due to optimistic data from China, especially the return of inflation to positive territory. In addition, hawkish remarks from Bank of Japan Governor Kazuo Ueda caused the dollar to weaken.
The U.S. dollar index, which measures the dollar’s value against a basket of currencies, rose to around 104.70. The U.S. dollar index pared losses as U.S. bond yields rose.
However, dollar bulls took a cautious stance ahead of Wednesday’s key U.S. CPI report. This data may affect market sentiment and the currency pair.
The market expects the overall CPI monthly rate to increase by 0.5%, compared with the previous value of 0.2%. The core CPI is expected to remain unchanged at 0.2%.
It is worth pointing out that if inflation data deviates from expectations, it may trigger a rapid change in market sentiment and affect the tendency of the dollar.
The dollar is expected to maintain its strength by effectively absorbing the impact of rising interest rates. In addition, positive economic data released by the United States will also provide additional support for the dollar.
