USD/CHF bears attack mid-0.8900s as US Dollar retreats ahead of inflation clues

USD/CHF holds lower grounds at the intraday bottom surrounding 0.8950 as bears defend the first daily loss in three heading into Monday’s European session. In doing so, the Swiss Franc (CHF) pair sellers cheer the broad US Dollar retreat amid cautiously optimistic markets.

US Dollar Index (DXY) pares the first weekly gain in four around 102.70 as it bears the burden of mild optimism surrounding China and receding geopolitical fears from Russia. Furthermore, consolidation ahead of this week’s US inflation clues and central bankers’ speeches also exerts downside pressure on the DXY.

That said, the weekend headlines suggesting sooner China stimulus join doubts about Russian President Vladimir Putin’s power in Moscow to underpin mildly positive sentiment. Alternatively, S&P’s recent downbeat China GDP forecasts and hawkish Fed concerns prod the market’s risk-on mood.

It should be noted that Fed Chair Jerome Powell’s testimony during the previous week renewed hawkish bias about the US Federal Reserve’s (Fed) move. On the same line were upbeat US PMIs and comments favoring two rate hikes from Federal Reserve Bank of San Francisco President Mary Daly.

Alternatively, Swiss National Bank (SNB) Chairman Thomas Jordan said in an interview aired by Swiss broadcaster SRF on Saturday, per Reuters, that SNB's recent interest rate hike was ‘very likely not quite’ enough to get a grip on inflation in Switzerland.

Against this backdrop, the S&P500 Futures rebound from the lowest levels in a week toward regaining the 4,400 round figure, up 0.20% intraday near 4,398 at the latest. That said, the US 10-year Treasury bond yields remain sidelined near 3.73%, after snapping a two-week downtrend, whereas the two-year counterpart braces for the fourth consecutive weekly winning streak near 4.74% by the press time.

Looking ahead, a light calendar in India emphasizes the US inflation data and the speeches of the top-tier central bankers at the European Central Bank (ECB) Forum as the key catalysts.

Technical analysis

USD/CHF extends the previous day’s U-turn from a two-week-old descending resistance line, around 0.9010 by the press time. Additionally favoring the Swiss France buyers past 0.9010 is the 200-Hour Moving Average (HMA), close to 0.8970, as well as the bearish MACD signals.