The USD/CHF pair saw a slight rise in a quiet market environment ahead of the release of US CPI data this week. Last week, disappointing US data led to a decrease in the value of the USD as markets turned bearish on the Federal Reserve. Traders are now awaiting the US inflation data to determine the direction of the market.
On Monday, the USD/CHF pair traded around 0.8970 with some gains, although it continues to show weakness following last week’s dovish sentiment towards the USD. With no major events on Monday, traders are focused on the upcoming US inflation data later in the week.
Investors are closely watching June’s Consumer Price Index (CPI) data, which will provide insights into whether the recent inflation increase is easing or if the softer readings in April and May were temporary. The expected deceleration in the CPI to 3.1% YoY from May’s 3.3% could impact market sentiment. Additionally, Fed Chair Powell’s Semiannual Monetary Policy Report to Congress on Tuesday may also influence the dynamics of the USD.
On the Swiss side, there are no major events expected this week, meaning the movement of the USD/CHF pair will be driven by the USD’s performance. The market anticipates a possible third interest rate cut by the Swiss National Bank (SNB) in September, while the odds of a rate cut by the Fed have risen to around 80% according to the CME FedWatch tool.
In terms of technical analysis, the short-term outlook for the USD/CHF pair remains negative. The pair broke a six-day winning streak and has recorded losses for three consecutive sessions. The MACD and RSI indicators signal a loss of momentum. Traders are now focused on whether the 20-day Simple Moving Average (SMA) at 0.8950 will hold as support, with the 100-day SMA at 0.8990 serving as the immediate resistance level.
Overall, the USD/CHF pair is likely to be influenced by the upcoming US inflation data and Fed Chair Powell’s remarks this week. Traders will closely monitor these events along with the technical indicators to determine the short-term direction of the market.
