USD/CHF tests bears around 0.8950 ahead of SNB Quarterly Bulletin, Fed Chair Powell’s speech

• USD/CHF prints the first daily gains in three, clings to mild gains of late.
• Upbeat US data, challenges to sentiment underpin US Dollar’s corrective bounce ahead of top-tier speeches.
• SNB’s Quarterly Bulletin should be closely observed to gauge hawkish bias at Swiss central bank.
• Fed Chair Powell needs to suggest further rate hikes to defend US Dollar.

USD/CHF consolidates weekly losses ahead of the top-tier data/events as its prints mild gains around 0.8945, snapping a two-day losing streak, heading into Wednesday’s European session. In doing so, the Swiss Franc (CHF) pair also justifies the trader’s preference for the US Dollar amid cautious mood and hawkish Federal Reserve (Fed) bets.

That said, S&P500 Futures pare the biggest daily jump in a fortnight with mild losses whereas the US Treasury bond yields remain depressed after rising in the last two consecutive days to portray the market’s dicey momentum.

It should be noted that the contrasting headlines surrounding China and the upbeat US data also allow the USD/CHF to grind higher.

Talking about the China news, US President Joe Biden said late Tuesday that China has enormous problems. His comments were joined by the Wall Street Journal (WSJ) news saying, “The Biden administration is considering new restrictions on exports of artificial intelligence chips to China, as concerns rise over the power of the technology in the hands of US rivals, according to people familiar with the situation.”

Previously, headlines suggesting Asian lobbyists are advocating for easier rules for Chinese equities’ overseas listing and comments from Premier Li Qiang joined the People’s Bank of China’s (PBoC) lower-than-expected fixing of the USD/CNY price to tease the Oil. Further, the US Dollar selling by major Chinese state banks, per Reuters, also weighed on the USD before the upbeat data prod the greenback bears.

On Tuesday, US Durable Goods Orders marked a surprise growth of 1.7% for May versus -1.0% market forecasts and 1.2% prior (revised). Further, the US Conference Board's (CB) Consumer Confidence Index rose to 109.7 for June from 102.5 in May (revised from 102.3). On the same line, US Housing Price Index rose to 0.7% in April from 0.5% in previous readings (revised), versus the 0.3% expected. Meanwhile, the S&P/Case-Shiller Home Price Index came in as -1.7% YoY for April, down from -1.1% prior but better than -2.6% market forecasts. Additionally, New Home Sales rose 12.2% MoM in May from 3.5% prior and 0.5% anticipated whereas the Richmond Fed Manufacturing Index improved to -7.0 in June compared to -15.0 prior and -10.0 expected.

Moving on, the Swiss ZEW Survey for June will precede the Swiss National Bank’s (SNB) Quarterly Bulletin to direct immediate USD/CHF moves ahead of Fed Chairman Jerome Powell’s speech Fed Chairman Jerome Powell

Technical analysis

The steady RSI (14) line joins the receding bearish bias of the MACD to suggest a gradual recovery in the USD/CHF price between the 50-DMA and ascending support line from early May, respectively near 0.8980 and 0.8920.