USD/CHF gathers strength to surpass 0.9040 as focus shifts to Fed’s hawkish dot plot

• USD/CHF is eyeing a break above 0.9040 amid optimism inspired by a V-shape recovery in the USD Index.
• After having detailed guidance over interest rates, investors are shifting their focus toward US Retail Sales data.
• SNB Jordan has already cleared that the negative effects of a low inflation environment are lower than a highly-inflated scenario.

The USD/CHF pair is facing delicate barricades around the immediate resistance of 0.9040 in the Asian session. The Swiss Franc asset is aiming to extend its upside journey supported by a solid recovery in the US Dollar Index (DXY).

S&P500 futures are showing nominal losses in Tokyo as investors are cautious that more interest rate hikes by the Federal Reserve (Fed) would push the United States swiftly toward recession. US equities were extremely volatile on Wednesday as optimism inspired by a skip in the policy-tightening spell by the Fed receded after Fed chair Jerome Powell confirmed that two small interest rate hikes are in the pipeline and will be announced by year-end.

The USD Index showed a V-shape recovery after printing a fresh four-week low at 102.66. Hawkish guidance by the Fed infused fresh blood into the USD Index. The asset is expected to extend gains further amid cautious market sentiment.

After having detailed guidance over interest rates, investors are shifting their focus toward monthly US Retail Sales (May) data. The economic data is seen contracting by 0.1% vs. an expansion of 0.4% registered in April. As food and gasoline prices have fallen significantly, a scrutiny of the Retail Sales report will be required to gauge whether the retail demand has contracted due to lower prices of necessities or the economy is losing resilience.

Meanwhile, the Swiss Franc bulls are failing to offset strength in the US Dollar despite the Swiss National Bank (SNB) is expected to raise interest rates further. SNB Chairman Thomas J. Jordan has already cleared that the central bank won’t wait for an increase in inflation as the negative effects of a low inflation environment are extremely lower than a highly-inflated scenario.