USD/CHF snaps eight-day uptrend near 1.0000 with eyes on Fed

• USD/CHF retreats from monthly high, stays pressured around intraday low of late.
• Softer US PPI allowed markets to brace for Fed’s anticipated aggressive rate hike.
• Yields ease from 11-year high, stock futures dribble around 17-month low.
• SECO forecasts, US Retail Sales may entertain traders ahead of FOMC.

USD/CHF bulls take a breather at a one-month high as the quote stays pressured around the intraday low near 0.9995 during the mid-Asian session on Wednesday. The Swiss currency (CHF) pair’s latest retreat could be linked to the market’s positioning for today’s US Federal Reserve (Fed) monetary policy, amid a pullback in the US Treasury yields.

That said, US 10-year Treasury bond yields drop 3.9 basis points (bps) to 3.45% as the bond coupons ease from the fresh high since 2011. The same underpins the mildly bid S&P 500 Futures around 3,750 to exert downside pressure on the USD/CHF prices.

Underlining the latest pullback in the bond coupons could be the US Producer Price Index (PPI) for May. The PPI matched 0.8% MoM forecasts, also easing to 10.8% YoY figures versus 10.9% expected and prior readouts. The PPI ex Food & Energy, known as Core PPI, dropped below 8.6% YoY forecasts to 8.3%.

It should be noted that the CHF’s safe-haven status also allows the pair sellers to take entries amid the rep-Fed cautious.

Rising expectations of a 75 bps rate hike from the Fed join the diplomatic push from the White House officials to hint at the US dollar’s rebound, which challenges the EUR/USD pair. White House (WH) Economic Adviser Brian Deese and National Economic Council Deputy Director Bharat Ramamurti were among the US diplomats who highlighted the inflation woes and showed readiness to battle the same during their interviews with CNN and Bloomberg respectively.

Elsewhere, covid woes in China, the world’s second-largest economy, also weigh on the metal prices. Beijing reported the highest coronavirus cases in three weeks the previous day and called for more activity restrictions. Shanghai, on the other hand, marked ease into the COVID-19 cases but keeps the recently announced limits to curb the virus from spreading too fast.

Looking forward, the quarterly release of Switzerland’s SECO Economic Forecasts will precede the US Retail Sales for May, expected 0.2% MoM versus 0.9% prior, to direct intraday USD/CHF moves ahead of the Federal Open Market Committee (FOMC).

Technical analysis

The overbought RSI line joins multiple hurdles around 1.0050-65 to challenge USD/CHF bulls. The pair sellers, however, need validation from the weekly support line surrounding 0.9900.