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USD/CHF rises modestly, with eyes on US inflation data this week

  • Ahead of the much-anticipated US inflation data, the USD/CHF posted a modest gain.
  • Fed Chairman Jerome Powell’s comments to the US Congress dictated market sentiment on Tuesday.
  • As expected, the Fed continues to call for patience and does not fully embrace the cuts.

On Tuesday, the USD/CHF found some support and rose slightly to 0.8980. The pair gained momentum as Federal Reserve (Fed) Chairman Jerome Powell addressed the US Congress and sounded cautious about the bank’s next steps. Beyond this, market participants are keeping an eye on Thursday, when the US will publish June inflation figures.

The market focus on Tuesday was on Jerome Powell’s Semiannual Monetary Policy Report. Powell claimed that stronger economic data would strengthen the Federal Reserve’s conviction in addressing inflation. He also noted that more than evidence that inflation is moving toward the 2% target before implementing rate cuts is crucial. Finally, he confirmed that the Fed’s decision-making is an ongoing process, considering policies at each meeting.

The much-awaited US Consumer Price Index (CPI) data for June will play a key role. The June headline CPI is expected to slow to 3.1%, down from May’s reading of 3.3%, marking the third consecutive monthly deceleration.

USD/CHF Technical Analysis

The short-term technical outlook for the pair has turned somewhat negative with the MACD and RSI indicators having lost significant ground but now settling in neutral territory.

The focal point now lies on whether the buyers will defend the 20-day simple moving average (SMA) at 0.8950. The pair found resistance at the 100-day SMA at 0.8990, effectively negating today’s gains. Accordingly, the pair may continue trading within the channel demarcated by the 100-day SMA and the 20-day SMA.

USD/CHF daily chart

Source: Fx Street

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