USD/CHF attempts to extend gains above 0.8900, focus on US CPI

• USD/CHF consolidates above the previous gains ahead of US economic data.
• The rebound in US bond yields and market caution lift the US Dollar.
• Elevated inflation figures could further reinforce the potential of the pair.

USD/CHF trades sideways around 0.8920 during the early trading hours of the European session on Wednesday, attempting to extend gains on the second day. The pair is experiencing upward support due to the recovery in the US Dollar (USD).

US Dollar Index (DXY) retraces the losing streak, which assesses the performance of the US Dollar (USD) against a basket of the other major six currencies. Spot price beats higher at around 104.80.

Additionally, the improved US Treasury yields contributed support to underpin the USD/CHF pair, coupled with the market caution ahead of the release of Consumer Price Index (CPI) data from the United States (US). The yield on the US 10-year bond improved to 4.29% at the time of writing.

Higher inflation figures would be an added factor to the prevailing hawkish sentiment surrounding the odds of further monetary tightening by the US Federal Reserve (Fed) through the end of the year 2023.

Moreover, the expectation that the Fed will keep interest rates at higher levels for an extended period can help the Greenback to maintain higher levels. The USD strength can be attractive to bulls.

US CPI is expected to exhibit a 0.5% month-on-month improvement from the previous month's reading of 0.2%. Moreover, the Core CPI figure is anticipated to remain steady at 0.2%. These figures may provide a clearer picture of inflation scenarios in the US economy and can have a significant impact on market sentiment and trading decisions about the USD/CHF pair.