This morning in Europe, the USD/CHF currency pair fell to a new one-month low as selling pressure rose over the 0.9050 support level. However, sellers continue to be pleased by the CHF pair thanks to a weak US dollar. According to the quote, Switzerland’s high inflation is justified.

At the time of this writing, the US Dollar Index (DXY) fell 0.13 percent to 103.85. The dollar’s value dropped versus the other six major currencies due to the bleak domestic data and moderately hopeful outlook.

On Monday, the Swiss CPI rose 0.3% MoM in May from 0.0%, beating the 0.4% forecast, while YoY data above the 2.1% market consensus with 2.2% but remained below 2.6%. The ISM Services PMI, S&P Global Composite PMI, Services PMI, and US Factory Orders were below 50 in May, casting doubt on aggressive Fed expectations. IMF’s Georgieva voiced alarm over potential interest rate increases from the Fed.

The Fed’s softening hawkish forecasts and recent news of a potentially risk-positive interaction between the U.S. and China have lifted market sentiment. Thus, despite Wall Street’s poor close, S&P500 Futures registered small gains as US Treasury bond yields recover from their losses earlier in the week.

The USD/CHF exchange rate will remain relatively stable during the next 15 days until the May 13-14 monetary policy meeting. The cautious market optimism and waning calls for a Fed rate rise have given sellers of pairs reason to be bullish.

Trade Idea

Consider selling USD/CHF below 0.9050 support, targeting further downside. Weak USD, Swiss CPI data, and improved market sentiment favor bearish momentum.