The USD/CHF currency pair has retraced recent gains, hovering near 0.8650 in Monday’s European session. The US dollar is facing downward pressure as US Treasury yields dip, following a lackluster US nonfarm payrolls report, which showed only 12,000 new jobs in October—well below the anticipated 113,000 and far from September’s revised 223,000 figure. However, the unemployment rate stayed at 4.1%, indicating some stability in the labor market despite weaker job growth.

The US Dollar Index (DXY) is trading around 103.80, with 2-year and 10-year Treasury yields at 4.17% and 4.31%, respectively. Market attention is also on the imminent US presidential election, as polling shows a close race between candidates Kamala Harris and Donald Trump. Additionally, the Federal Reserve’s policy announcement is due this week, with expectations leaning towards a cautious 25 basis point rate cut.

Meanwhile, in Switzerland, the yield on the 10-year government bond has dropped to 0.38%, its lowest since early October. This decline reflects increased expectations for the Swiss National Bank (SNB) to consider a more significant rate cut in December as inflation continues to slow. October’s CPI showed a 0.6% year-over-year decrease, below the 0.8% forecast and marking the slowest inflation growth since July 2021.

Trade Idea:

With the Fed and SNB leaning towards potential rate cuts, USD/CHF may remain under pressure. The 0.8600 level is a crucial support to watch, while any near-term resistance lies around 0.8700.