USD/CHF climbs to fresh seven-week highs near 0.9800

• Annual core CPI in US stayed unchanged at 2.3% in January.
• US Dollar Index clings to small gains above 99.
• 10-year US Treasury bond yield erases majority of early losses.

The USD/CHF pair dropped to 0.9760 area on Thursday as the risk-off atmosphere allowed the CHF to gather strength against its major rivals. The broad-based USD strength, however, helped the pair reverse its direction during the early American session. As of writing, the pair was trading at its highest level since late December at 0.9793, adding 0.12% on a daily basis.

China reported a sharp increase in the number of coronavirus infections after changing the counting method and triggered a flight to safety. Asian equity indexes suffered heavy losses and European stocks erased more than 1% earlier in the day before rebounding. Reflecting the recovering sentiment, the 10-year US Treasury bond yield, which lost more than 3%, retraced its fall and was last down 1% on the day.

USD stays strong after inflation data

In the meantime, supported by the US inflation report, the US Dollar Index climbed above the 99 mark to help the pair push higher. The data published by the US Bureau of Labor Statistics (BLS) on Thursday showed that the core Consumer Price Index stayed unchanged on a yearly basis at 2.3% to come in higher than the market expectation of 2.2%.

As of writing, the US Dollar Index was at its highest level since October 9th at 99.05.

There won't be any other macroeconomic data releases from the US in the remainder of the day and markets will be paying attention to Wall Street's performance and T-bond yields to see if the risk sentiment continues to improve.

Technical levels to watch for