USD/CHF eases from 0.8850 highs heading on the US inflation release

• The US Dollar recovery stalls below 0.8850 ahead of the US inflation report.
• US CPI is expected to reflect steady price pressure that might force to scale back easing expectations for next year.
• The SNB is expected to cut rates by 25 basis points on Thursday.

The US Dollar is trading higher for the fourth consecutive day although bulls have been halted at 0.8850 with investors awaiting the reading of November’s US CPI figures.

The pair accelerated its rebound from last week's lows at 0.8735 on Tuesday. The Dollar has been appreciating across the board this week, with investors anticipating a strong US inflation report today.

November’s CPI is unlikely to alter market expectations of a 25 bps Fed cut next week but might force to scale back monetary easing hopes for next year. This would buoy US Treasury yields and drag the US Dollar higher with them.

In Switzerland, the SNB is expected to cut rates on Thursday and might leave the door open for further cuts in early 2025 considering the weak inflation levels. A large rate cut, which is not completely discarded, would take markets by surprise and hit the CHF.