USD/CHF retreats from early June highs, testing 100-day SMA

• The USD/CHF pair hits early June's highs but retreats back to 0.8990.
• USD bearishness comes in due to disappointing PCE data for May.
• The market odds for a September interest-rate cut by the Fed have slightly increased.

On Friday, the USD/CHF pair was unable to hold its momentum, depreciating due to soft Personal Consumption Expenditures (PCE) figures from May. Without any significant news or data coming from Switzerland, the pair has mainly been influenced by the US data as investors place their bets on the next Federal Reserve (Fed) movements.

The highlight of Friday was the disappointing PCE) data from the US in May. The PCE inflation edged lower on a yearly basis to 2.6% in May, in line with the market expectations, from 2.7% in April. On a monthly basis, the PCE Price Index remained unchanged in May. As a reaction, the soft data helped increase the probability of a September interest rate cut by the Fed to nearly 66%, according to the CME FedWatch tool.

However, Federal Reserve officials continue to caution about the possibility of an interest rate cut, with Bostic advising that he only sees one cut for this year in Q4, further adding that he has penciled in four cuts for 2025 but questions the reliability of projections so far in advance. As the Fed remains data dependent, eyes will flick to labor data from June for markets to acquire more guidance on the US economy.

The focus on the Swiss economic calendar continues to be minimal with attention being diverted towards Sunday's first round of the French legislative elections which may induce some movement in the eurozone currencies.

USD/CHF technical analysis

Looking at the technical outlook, the pair's positioning appears promising. The pair has solidified its position above the 20, 100, and 200-day Simple Moving Averages (SMA), lending a positive outlook to the future. Despite some bearish undercurrents, the pair have maintained a four-day winning streak and gained nearly 1.50% over the last seven sessions. The focus on the buyers should be maintaining the recently gained 100-day SMA at 0.8980.

USD/CHF daily chart