USD/CHF modestly gains near 50-DMA, bulls eyeing a move above 0.9000

The USD/CHF pair has been modestly gaining near the 50-day Simple Moving Average (SMA), with traders watching closely for a move above the significant 0.9000 level. This comes as the pair has continued to trade positively for the fourth day in a row. However, despite this positive trend, the pair has not been able to sustain its momentum and remains below the psychological threshold of 0.9000 through the Asian trading hours.

This upward trend is largely attributed to the strengthening US Dollar (USD), which is inching closer to its highest level since June 12. The last time the USD reached this level was on the previous Friday, making this a significant factor propelling the USD/CHF pair’s upward trajectory.

The minutes from the June meeting of the Federal Open Market Committee (FOMC), released on Wednesday, have thrown more light on the current situation. The minutes revealed that nearly all members were in favor of restarting rate hikes due to persistently high inflation levels. This revelation has reinforced market expectations for a 25 basis points increase at the upcoming FOMC meeting scheduled for July 25-26. As a result, there was a sharp overnight surge in US Treasury bond yields, which continues to bolster the Greenback.

However, despite these positive signs, the USD/CHF pair is finding it hard to capitalize on this upward movement beyond the 50-day SMA. It has remained trapped within a familiar trading range established over the past few weeks. A generally weaker risk sentiment, which usually strengthens the safe-haven Swiss Franc, is discouraging traders from placing aggressive bullish bets. This seems to be limiting the upside potential for the major currency pair.

Market sentiment remains fragile, largely due to concerns about a global economic slowdown and the potential for further escalation in the US-China trade conflict. China recently imposed new export restrictions on two metals widely used in semiconductors, electric vehicles, and high-tech industries. These restrictions are set to take effect on August 1. This sudden move could disrupt global trade further and worsen already weak economic conditions.

Given the current market conditions, it seems wiser for traders to wait for a sustained rise above the 0.9000 mark before positioning for any further short-term appreciating move for the USD/CHF pair. Investors are now anticipating the release of several key US economic indicators, including the ADP report on private-sector employment, Weekly Initial Jobless Claims, the ISM Services PMI, and JOLTS Job Openings data. These indicators, along with US bond yields, will likely influence USD price dynamics, providing some impetus to the USD/CHF pair. However, the primary focus will be on the highly anticipated US monthly employment details, known as the NFP report, due on Friday.