USD/CHF licks its wounds after the biggest daily fall in 10 weeks, focus on Fed Chair Powell

• USD/CHF holds lower grounds after declining the most since late November.
• Broad US Dollar weakness favored bears despite downbeat Swiss Retail Sales.
• Softer US Employment Cost Index, Consumer Confidence joined firmer equities to weigh on USD ahead of Fed’s verdict.
• Fed’s 0.25% rate hike is almost given and hence Powell need to save the USD with his hawkish statements.

USD/CHF steadies around 0.9160 after marking the biggest daily slump in nearly 2.5 months the previous day. The Swiss currency pair’s fall on Tuesday could be linked to the broad US Dollar weakness and the firmer equities, which in turn enabled the quote to ignore downbeat data at home.

That said, the Swiss Retail Sales for December slumped to -2.8% YoY versus 2.6% expected and -1.4% prior.

On the other hand, the US Employment Cost Index (ECI) for the fourth quarter (Q4) gained major attention as it eased to 1.0% versus 1.1% market forecasts and 1.2% prior readings. Further, the Conference Board (CB) Consumer Confidence eased to 107.10 in January versus 108.3 prior. It should be noted that no major attention could be given to the US Chicago Purchasing Managers’ Index (PMI) for January which rose to 44.3 versus 41 expected and 44.9 previous readings.

Further, upbeat Wall Street closing, due to firmer earnings from industry majors like General Motors, Exxon and McDonalds, also exert downside pressure on the US Treasury bond yields and favored the US Dollar bears.

Amid these plays, the US Dollar Index (DXY) snapped a three-day rebound, staying defensive near 102.00 by the press time.

Moving on, multiple US PMIs for January may entertain USD/CHF pair traders ahead of the Federal Reserve’s (Fed) interest rate decision. Even so, major attention will be on how Fed Chairman Jerome Powell could defend his hawkish bias as the 0.25% rate hike is already priced-in.

Also read: Federal Reserve Preview: The Good, the Bad and the Ugly, why the US Dollar would rise

Technical analysis

A clear downside break of the two-week-old ascending trend line, now immediate resistance around 0.9205, directs USD/CHF towards the previous monthly low of 0.9085.