The USD/CHF pair experienced a setback after hitting early June highs and retreated to 0.8990. This depreciation was mainly due to disappointing PCE data for May, which revealed a decrease in PCE inflation on a yearly basis to 2.6%. As a result, the probability of a September interest rate cut by the Federal Reserve increased to about 66%. Despite this, Federal Reserve officials continue to be cautious about the possibility of a rate cut, with some suggesting only one cut for this year.
The pair has been primarily influenced by US data as investors anticipate the next moves by the Fed. Federal Reserve officials are emphasizing the importance of labor data from June to gain more guidance on the US economy. Meanwhile, the Swiss economic calendar has taken a back seat as markets turn their attention to the French legislative elections, with potential impacts on eurozone currencies.
From a technical perspective, the USD/CHF pair’s positioning looks positive, with the pair trading above the 20, 100, and 200-day Simple Moving Averages (SMA). Despite a slight bearish sentiment, the pair has maintained a four-day winning streak and gained around 1.50% over the last seven sessions. Buyers should aim to sustain the recently gained 100-day SMA at 0.8980 to maintain the positive momentum.
In conclusion, the USD/CHF pair faced a setback following disappointing PCE data for May, leading to increased expectations of a September interest rate cut by the Fed. While Federal Reserve officials remain cautious about the timing of rate cuts, the focus remains on upcoming labor data to gauge the health of the US economy. The technical outlook for the pair remains positive, with buyers looking to maintain key support levels to sustain the current upward momentum. Investors will continue to monitor US economic data and Fed statements for further insights into future market movements.
