USD/CHF mildly rises, eyes on US inflation data this week

• Ahead of the much-anticipated US inflation data, the USD/CHF saw a mild rise.
• Fed Chair Jerome Powell's comments to the US Congress dictated market sentiments on Tuesday.
• As expected, the Fed continues to ask for patience and does not fully embrace cuts.

On Tuesday, the USD/CHF found some footing and mildly rose to 0.8980. The pair gained momentum as the Federal Reserve (Fed) Chair Jerome Powell addressed the US Congress and showed himself cautious regarding the bank’s next steps. Beyond this, market participants are eyeing Thursday when the US releases June's inflation figures.

The market's focus on Tuesday was on Jerome Powell's Semiannual Monetary Policy Report. Powell stated that sounder economic data would fortify the Federal Reserve's conviction in tackling inflation. He also noted that more than evidence of inflation moving towards the 2% target before implementing rate cuts is crucial. Finally, he further confirmed that the Fed's decision-making is an ongoing process, considering policies at every meeting.

The highly anticipated June Consumer Price Index (CPI) data from the US will have a pivotal role. June's headline CPI is expected to slow to 3.1%, descending from May's reading of 3.3%, thereby marking the third consecutive monthly slowdown.

USD/CHF technical analysis

The short-term technical outlook for the pair has somewhat turned negative with the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) indicators having lost significant ground but now lying in neutral terrain.

The focal point now lies in whether the buyers will defend the 20-day Simple Moving Average (SMA) at 0.8950. The pair found resistance at the 100-day SMA at 0.8990, effectively nullifying today's gains. Consequently, the pair may continue trading within the channel demarcated by the 100-day and 20-day SMA.

USD/CHF daily chart