USD/CHF stays defensive below 0.9700 with eyes on Fed’s Powell

• USD/CHF fades rebound from a fortnight-low, remains sidelined of late.
• US holiday joined firmer equities to exert downside pressure.
• Bulls remain hopeful amid fears of recession, aggressive central bank actions.
• Swiss trade numbers, second-tier US data can entertain traders ahead of Powell’s Testimony.

USD/CHF seesaws around 0.9675, fading the late Monday’s bounce off a two-week low, as traders await fresh catalysts. Even so, the bears keep reins during Tuesday’s Asian session amid broad US dollar weakness and cautious optimism in the market ahead of the key events.

US Dollar Index (DXY) began the week on a negative note as the Juneteenth holiday allowed bears to take a breather. That said, the greenback’s gauge versus the six major currencies dropped 0.16% to 104.45 by the end of Monday, taking round to the same level at the latest.

In addition to the US holiday, a light calendar and traders’ indecision over the market’s next moves, despite holding fears of faster monetary policy tightening and economic slowdown, also exerted downside pressure on the USD/CHF prices.

Also contributing to the pair’s downside momentum are headlines suggesting an improvement in China’s covid conditions and the US readiness to ease the Trump-era tariffs on the dragon nations. Furthermore, the market’s consolidation amid an absence of the US traders offered additional help to the USD/CHF pair sellers amid firmer US stock futures.

That said, the US Treasury yields begin the week around 3.27%, mostly unchanged, while the S&P 500 Futures seem to fade the previous day’s upside momentum.

Looking forward, Swiss trade numbers for May will precede the Chicago Fed National Activity Index and the US Existing Home Sales for the said month to entertain short-term traders. However, major attention will be given to Federal Reserve (Fed) Chairman Jerome Powell’s Testimony on the bi-annual Monetary Policy Report, on Wednesday and Thursday.

Technical analysis

USD/CHF bears attack an upward sloping trend line from late March, around 0.9650 by the press time, a break of which won’t hesitate to direct bears towards the two-month-old horizontal support area near 0.9550-45. Meanwhile, recovery moves need validation from 0.9720.