USD/CHF bears attack 0.9050 monthly support as US Dollar fails to track corrective bounce in yields

• USD/CHF drops for the second consecutive day as bears attack key support line.
• US Dollar remains depressed as weak data weighs on Fed bets amid pre-FOMC blackout.
• Cautious optimism allows US stock futures, yields to rebound amid mixed feelings, light calendar.

USD/CHF extends the previous day’s losses as sellers prod a one-month-old rising support line around 0.9050 amid early Tuesday morning in Europe. That said, a broad US Dollar weakness allows the Swiss Franc (CHF) pair to please sellers for the second consecutive day. In doing so, the quote justifies the upbeat inflation numbers from Switzerland.

That said, the US Dollar Index (DXY) extends the previous day’s downbeat performance while registering a 0.13% intraday loss near 103.85 by the press time. In doing so, the greenback’s gauge versus the six major currencies suffers from the downbeat data at home, as well as the mildly positive sentiment.

On Monday, the Swiss Consumer Price Index (CPI) rose to 0.3% MoM in May from 0.0% prior, versus 0.4% expected, whereas the YoY figures crossed 2.1% market consensus with 2.2% figures but stayed below 2.6% previous readings. On the other hand, most of the US PMIs for May, be it the ISM Services PMI or the final readings of S&P Global Composite PMI and Services PMI, as well as the US Factory Orders for the said month, marked downbeat figures and pushes back the hawkish Fed concerns. On the other hand, IMF’s Georgieva flagged concerns about more Fed rate hikes.

It should be noted that the latest headlines suggesting a risk-positive dialogue between the US and China join the receding hawkish Fed bets to allow the market sentiment to improve. As a result, the US Treasury bond yields reverse the week-start losses whereas the S&P500 Futures print mild gains despite the downbeat closing of Wall Street.

Looking ahead, a light calendar and an absence of the Fed talks, due to the 15-day silence period ahead of the monetary policy meeting on May 13-14, will restrict the USD/CHF moves. Even so, the cautious optimism in the markets and easing calls of the Fed’s rate hike keep the pair sellers hopeful.

Technical analysis

USD/CHF pair’s sustained U-turn from the 100-DMA hurdle, around 0.9125 by the press time, joins downbeat oscillators to favor sellers as they prod the ascending support line stretched from early May, around 0.9050 at the latest.