USD/CHF bulls approach 0.9650 ahead of Fed’s preferred inflation, Powell’s speech at Jackson Hole

USD/CHF grinds higher around the monthly top, picking up bids to refresh the intraday high near 0.9635-40 during Friday’s Asian session. In doing so, the Swiss currency (CHF) pair portrays the market’s sluggish performance as traders await this week’s key data/events for fresh impulse. That said, the risk-on mood joined mildly positive US data and Fedspeak to weigh on the quote the previous day.

Recently, the US has suspended 26 Chinese carrier flights in response to China's action, per Reuters, which in turn tested the previous risk-on mood and the USD/CHF bears. Further, a letter got viral quoting US President Joe Biden as saying, “The US struck Iran-backed forces in Syria in order to safeguard American civilians both at home and abroad.”

Previously, China’s near one trillion stimulus and mildly firmer US data, as well as Fedspeak, favored the USD/CHF sellers. Also, a holistic approach by the domestic institutions to safeguard the world’s second-largest economy renewed market optimism earlier.

Additionally, the second estimate of the US Gross Domestic Product (GDP) Annualized improved to -0.6% in the second quarter (Q2) versus -0.9% flash estimations and -0.8% market forecasts. Further, US Initial Jobless Claims dropped to the lowest levels in seven weeks, to 243K for the week ended on August 19 versus 253K expected and a revised down prior of 245K.

It’s worth noting that mixed Fedspeak, mostly downbeat, also exerted downside pressure on the USD/CHF prices. Kansas City Fed President Esther George said on Thursday, "For the near-term thinking about higher interest rates seems reasonable to me." The policymaker also mentioned that (it’s) too soon to say what to expect in September (as) more key data coming. Philadelphia Fed President Patrick Harker was on the same line while he noted, per Reuters, that he wants to see the next inflation reading before deciding on the September rate decision but added that a 50 basis points rate hike would still be a substantial move. Also, Atlanta Fed President Raphael Bostic said to the Wall Street Journal (WSJ) that “at this point, I'd toss a coin between 50 bps and 75 bps,” adding that “if data remains strong and inflation doesn't soften, it may make a case for another 75 bps.

Having witnessed an upbeat day, USD/CHF traders may mark the inactive session ahead of Fed Chair Powell’s speech at the Jackson Hole. Before that, the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, may entertain the market players. Forecasts suggest that the YoY print is to ease to 4.7% from 4.8% while the monthly figures may drop to 0.3% while 0.6% prior.

Technical analysis

A 10-week-old descending trend line and the 100-DMA, respectively near 0.9650 and 0.9665, restrict immediate USD/CHF upside. The bears, however, need validation from the 50-DMA support level near 0.9620 to take fresh entry.