USD/CHF has bounced back and now is located at 0.8994 level after the US Dollar Index (DXY) rallied on Friday. The DXY has managed to pass above the immediate high after the US inflation data was reported better than expected.
The USD needs more support from the US economy to be able to resume its growth. On that score there were positive signs last week from the consumer that drives the all-important services sector. The US Michigan Consumer Sentiment gauge improved further to to 86.4 in June, which was better than the 84 expected by the market market.
The FOMC Meeting and the retail sales data could be decisive this week. The Fed is expected to maintain its monetary policy unchanged during June’s meeting. Still, any hint that the Federal Reserve will take action in the upcoming period could boost the DXY and could force the USD to appreciate.
All eyes on US retail sales data tomorrow
The US retail sales data will be released tomorrow. Retail Sales data is expected to drop by 0.6%, while the Core Retail Sales could increase by 0.4% versus a 0.8% drop registered in the former reporting period. Better-than-expected data could help the dollar to resume its growth ahead of the FOMC.
For now the market is convinced by the pronouncements from the Fed concerning the transitory nature of elevated inflation, which the US central bank expects to fall back as pent-up demand alleviates and pressures on raw materials and other input prices calms.
Despite US inflation figures last week seemingly running hot, US bond yields did not rise as would normally be expected, which is taken as evidence of the fixed income markets willingness to agree with the Fed on the transitory inflation scenario.
USD/CHF price: trapped in a narrow range
USD/CHF is trapped within a narrow range between 0.8930 and 0.9051 levels. The pair has developed something like a Double Bottom pattern. Still, this pattern could be activated and confirmed if the price makes a new higher high, a valid breakout above 0.9051.
The pair is traded above the weekly pivot point (0.8971) and beyond the 150% Fibonacci line of the descending pitchfork. The next upside target is seen at the weekly 0.9016. Also, the price could be attracted by the lower median line (lml) of the descending pitchfork if the DXY resumes its growth.
Technically, USD/CHF could move sideways before the FOMC. Maybe this high-impact event could bring us a clear direction, a valid breakout from this range. A larger growth could be indicated by an upside breakout from this pattern.
Any advance by the US dollar may run into the still solid wall of the Swiss Franc’s safe haven status. Although the near-term outlook is
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