USD/CHF justifies Thursday’s Doji to defend 0.9600 at three-week low

• USD/CHF stays defensive after refreshing multi-day low, bullish candlestick formation teases corrective pullback.
• Risk-aversion, lack of data could underpin the recovery moves.
• Second-tier US statistics, qualitative catalysts to direct intraday traders.

USD/CHF extends late Thursday’s rebound from a three-week low towards piercing the 0.9600 threshold, around 0.9610 during Friday’s initial Asian session.

In doing so, the Swiss currency pair not only justifies the risk-off mood but also takes clues from the technical analysis, as well as the lack of major data/events, to consolidate the weekly losses.

Federal Reserve (Fed) Chairman Jerome Powell cited inflation and recession woes as the challenges to ensure a smooth landing, despite expecting firmer growth this year, during his second round of Testimony. The central banker’s concern for recession joined downbeat US data to favor the risk-off mood.

On the same line were downbeat US PMIs as S&P Global Services PMI for the US slumped to 51.6 in June from 53.4 prior, not to forget missing the 53.5 forecasts. Further, the Manufacturing PMI not only missed the market expectation of 56 by a wide margin in June, to 52.4 versus 57.00 previous readings, but also slumped to a nearly two-year low.

Against this backdrop, the S&P 500 Futures drop 0.30% while the US 10-year Treasury yields remain unchanged at around 3.09% after dropping to a fortnight low the previous day.

Moving on, a light calendar may test the USD/CHF pair traders but risk catalysts and the second-tier US data for housing and activities may offer intermediate moves.

Technical analysis

Bullish candlestick formation joins the USD/CHF pair’s rebound from the 50-day EMA, around 0.9560 at the latest, to keep buyers hopeful. However, the 21-day EMA near 0.9715 guards the short-term advances of the pair.