USD/CHF bulls struggle around 0.8950 on Juneteenth holiday, SNB, Fed announcements eyed

• USD/CHF clings to mild gains as bulls lack momentum amid sluggish markets.
• US Dollar grinds higher amid slightly downbeat sentiment, Fed concerns.
• Holiday in the US stock, bond markets restrict immediate moves amid mixed catalysts.
• SNB Interest Rate Decision, Fed Chair Powell’s Testimony and US PMIs are the key for clear directions.

USD/CHF stays defensive around 0.8940-45, fading the previous day’s bounce of a five-week low, heading into Monday’s European session. In doing so, the Swiss Franc (CHF) pair portrays the market’s indecision amid the US Juneteenth holiday and cautious mood ahead of this week’s monetary policy meeting decision from the Swiss National Bank (SNB).

Apart from the holiday in the US shares and bond markets, mixed concerns about the Federal Reserve (Fed) and SNB also prod the USD/CHF traders amid a light calendar. That said, hawkish comments from the Fed policymakers, as well as the latest report from the US central bank to Congress underpin the US Dollar while expectations of witnessing further rate hikes from the SNB prod the Swiss Franc (CHF) bears.

Earlier in June SNB Governor Thomas Jordan said, “It's really important to bring Swiss inflation to a level of price stability."  The policymaker also showed readiness to lift the rates before the inflation rise.

On the other hand, Richmond Fed President Thomas Barkin said, “Raising rates further could create the risk of a more significant slowdown in the economy.” The policymaker, however, also added that the Fed can do comfortable more to slow the resilient US economy, which in turn triggered a jump in the 2-year Treasury bond yields to 4.75% and helped the US Dollar to get off the lows. Not only Fed’s Barkin but Chicago Fed President Austan Goolsbee and Federal Reserve Governor Christopher Waller also appeared a bit hawkish and helped the DXY to reverse from a multi-day low the previous day. Furthermore, the Fed’s Monetary Policy Report to the US Congress, published Friday stated, “Inflation in the US is well above target and the labor market remains very tight,” as per Reuters.

It’s worth noting that headlines surrounding multiple banks cutting China’s growth forecasts recently challenged the market’s risk appetite and propel the USD/CHF price.

On a different page, mixed US data and hopes of more stimulus from China, as well as an absence of the US-China tussle during their respective diplomats’ first talks in many months, prod the risk-off mood and check the USD/CHF bulls.

Looking ahead, an off in the US markets will join the pre-SNB anxiety to restrict the USD/CHF moves. While the SNB is likely to announce a 0.25% rate hike, any surprises can’t be ruled out and hence can very well recall the pair sellers. However, Fed Chair Jerome Powell is also up for the bi-annual Testimony and can bolster the hawkish bias to challenge the pair sellers. Additionally, preliminary PMIs for June also become crucial for near-term directions.

Technical analysis

The steady RSI (14) line joins bearish MACD signals and the USD/CHF pair’s sustained break of the 50-DMA, around 0.8980 by the press time, to keep sellers hopeful.