USD/CHF bears flirt with 0.9500 at 3.5-month low with eyes on Fedspeak, US NFP

• USD/CHF pauses the five-day downtrend around the lowest levels since late April.
• Market sentiment dwindles amid recession fears and likely fresh Sino-American tussles.
• Second-tier Swiss data, Federal Reserve speakers could entertain traders after Switzerland’s long weekend.

USD/CHF bears take a breather after declining to the lowest levels in 14 weeks the previous day, which also marked the five-day downtrend. That said, the Swiss currency (CHF) pair recently seesaws around 0.9500 as traders await fresh clues as the Swiss traders return from the holiday on Tuesday.

The USD/CHF pair’s recent losses could be linked to the US dollar’s broad weakness amid fears of the “technical recession”, as well as anxiety ahead of Friday’s Nonfarm Payrolls (NFP). However, the recent shift in the market sentiment, due to the expected US-China tussles, appeared to have put a floor under the prices.

US Dollar Index (DXY) refreshed its monthly low, before bouncing off 105.25 on Monday, as fears of economic slowdown joins Fed Chair Jerome Powell’s indirect signals that the hawks are running out of steam. Even so, disappointing statistics from the US and Europe, as well as the Sino-American tensions, might have probed the greenback bears of late.

US ISM Manufacturing PMI dropped to the lowest since 2020 in July as the activity gauge dropped to 52.8 versus 53.0 prior. However, the actual figures were better than the 52.0 market forecast. Also, final readings of the US S&P Manufacturing PMI eased below 52.3 initial estimates to 52.2, compared to 52.7 prior. Furthermore, Germany’s Retail Sales dropped 8.8% YoY in June versus -8.0% market consensus and -3.6% prior.

Elsewhere, Reuters quotes three sources familiar with the matter to mention that US House of Representatives Speaker Nancy Pelosi was set to visit Taiwan on Tuesday as the United States said it wouldn't be intimidated by Chinese threats to never "sit idly by" if she made the trip to the self-ruled island claimed by Beijing.

On the same line was the news suggesting that the US is considering limiting shipments of American chipmaking equipment to memory chip makers in China.

Against this backdrop, Wall Street closed with mild losses while the US 10-year Treasury yields refreshed a four-month low of around 2.58%. That said, the S&P 500 Futures print mild losses of around 4,120 by the press time.

Moving on, the Swiss SECO Consumer Climate Index for three-month to the third quarter (Q3) and SVME Purchasing Managers’ Index for July could entertain traders ahead of speeches from Charles L. Evans,  the ninth President and Chief Executive Officer of the Federal Reserve Bank of Chicago, as well as from is the President of the Federal Reserve Bank of St. Louis James Bullard.

Given the recent risk-aversion and a light calendar ahead, USD/CHF may witness lackluster moves heading into the key PMIs and US jobs report.

Technical analysis

Considering the nearly oversold RSI (14), March’s high of 0.9460 appears to be the last defense for the USD/CHF buyers before directing the quote towards the 200-DMA support near 0.9415.

On the contrary, the previous support line, at 0.9605 by the press time, guards the recovery moves of the pair.