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USD/CHF holds lower ground after reversing from five-week high.
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The sluggish market, closed in the US, limited immediate action in Canada.
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Risk-negative headlines, hawkish Fed challenges the bearish bias.
USD/CHF flirts with the intraday low surrounding 0.9240 amid early Monday in Europe. In doing so, the major currency pair remains pressured toward the previous resistance line from late November 2022. However, a light calendar and holiday in the US, as well as in Canada, restrict immediate moves of the Swiss Franc (CHF) pair.
Better-than-forecast prints of the US Consumer Price Index (CPI) and Retail Sales followed the previously flashed upbeat readings of employment and output data and propelled the US Treasury bond yields, as well as the US Dollar. On the same line could be the hawkish Federal Reserve (Fed) comments and the risk-negative catalysts surrounding China, North Korea and Russia.
However, mixed comments from Fed officials on Friday probed the US dollar bulls and appeared to have triggered the USD/CHF pair’s U-turn from multi-day highs. That said, Fed Governor Michelle Bowman recently said, “We’re seeing a lot of inconsistent data on economic conditions,” Reuters reports. In contrast, Richmond Fed President Thomas Barkin said he sees some improvement in inflation as demand normalizes, as reported by Reuters.
Elsewhere, North Korea fired two ballistic missiles toward Japan, renewing fears that the monastic empire could be something serious that could threaten the global economy, largely due to the nature of the missiles, which were described as strategic nuclear attack weapons. However, both missiles came down before Japan’s borders and gave traders a sigh of relief even as Japanese Prime Minister Fumio Kishida called for the issues to be discussed at a meeting of the UN Security Council.
On the same line, the latest meeting between US Secretary of State Antony Blinken and China’s top diplomat Wang Yi seemed to have failed in restoring the US-China ties. The reason could be linked to a Chinese diplomat’s comments saying that the US must change course and repair the damage done to Sino-US ties by indiscriminate use of force. On the same line, US ambassador to the United Nations, Ambassador Linda Thomas-Greenfield, said Sunday that China would cross a “red line” if the country decided to provide lethal military aid to Russia for its invasion of Ukraine.
Against this backdrop, the S&P 500 Futures print mild losses even as Wall Street closed mixed. It’s worth noting that the US 10-year Treasury bond yields rose to the highest levels since early November in the last week and helped the US Dollar Index (DXY) to print a three-week uptrend, before retreating to 103.90 as of late.
Moving ahead, light calendar and holidays in the key markets may offer a sluggish trading session ahead of Wednesday’s key Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting. Following that, the second reading of the US fourth quarter (Q4) Gross Domestic Product (GDP) will be important to forecast the USD/CHF moves.
Technical analysis
USD/CHF remains on the bull’s radar unless breaking below the three-month-old descending resistance line, now support line near 0.9230 at the latest.
ADDITIONAL IMPORTANT LEVELS
