The USD/CHF pair extended its losing streak into a third trading session on Monday. Despite the US Dollar rebounding, the Swiss Franc weakened amidst market uncertainty ahead of a busy week for US economic data releases.

This week is pivotal for the US economic calendar, featuring high-impact events such as the ISM Manufacturing and Services PMI, ADP Employment Change, Nonfarm Payrolls (NFP) data for May, and the JOLTS Job Openings for April. These data points are crucial for gauging when the Federal Reserve (Fed) might begin lowering its key interest rates this year. Currently, market expectations are centered around the Fed starting rate cuts in the September meeting.

In today’s session, the focus is on the US ISM Manufacturing PMI, set to be released at 12:30 GMT. The PMI is forecasted to rise slightly to 49.8 from 49.2. However, a reading below the 50.0 mark indicates contraction in the manufacturing sector. Investors will also scrutinize sub-components such as the New Orders and Prices Paid Indexes, which serve as leading indicators of inflation.

Meanwhile, the Swiss Franc is showing strength ahead of the Swiss Consumer Price Index (CPI) data for May, scheduled for release on Tuesday. This CPI data will provide the latest inflation reading for Swiss National Bank (SNB) policymakers and could influence their decisions regarding future rate cuts. The monthly CPI is expected to grow at a faster pace of 0.4%, up from the previous 0.3% reading.

The anticipation surrounding these economic indicators underscores the market’s sensitivity to inflation trends and employment data, both of which will play significant roles in shaping monetary policy decisions in the near term.

Trade Idea:

Consider shorting USD/CHF around 0.9050 with a target of 0.8970 and a stop-loss at 0.9100. This strategy leverages the ongoing weakness in USD/CHF despite the rebound in the US Dollar, factoring in the potential strength of the Swiss Franc ahead of key inflation data.