USD/CHF is trading near its more than four-month low near 0.8750 with focus on US NFP.

• USD/CHF remains on the defensive near 0.8750 despite a strong recovery in the US Dollar.
• The US Dollar is recovering as the Fed’s dovish stance had already been factored in by market participants.
• The Swiss franc is showing strength ahead of the release of the July CPI on Friday.

The USD/CHF pair is holding near a more than four-month low around 0.8750 during European trading hours on Thursday. The Swiss Franc asset remains weak despite the US Dollar (USD) showing a strong recovery move after plunging to a fresh weekly low.

The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, jumped near 104.35 after rebounding from a weekly low of 103.86.

Despite a strong reversal move in the US Dollar, weakness in the pair points to strong Swiss Franc. The Swiss currency is exhibiting strength ahead of the July Consumer Price Index (CPI) report, due out on Friday.

On a monthly basis, price pressures are expected to have eased by 0.2% after remaining unchanged in June, with annual figures growing steadily by 1.3%. The scenario in which price pressures rose at a slower pace would be favourable for bets supporting further rate cuts by the Swiss National Bank (SNB).

Meanwhile, the US dollar has rallied at a robust pace as investors had already priced in expectations that the Federal Reserve (Fed) will offer dovish guidance on interest rates after leaving them unchanged in the 5.25%-5.50% range in its monetary policy announcement on Wednesday.

The US Dollar is expected to remain volatile as the US ISM Manufacturing PMI and Non-Farm Payrolls (NFP) for July reports are scheduled for release. The Manufacturing PMI will be released at 14:00 GMT, while the NFP report is scheduled for release on Friday.