Bulls fail to maintain momentum and retreat to 0.8870

• The USD/CHF cleared daily gains, which saw the pair jumping to 0.8915 and settling at 0.8870.
• Markets are still digesting US mixed NFP report.
• Eyes on US CPI data on Wednesday, expected to have decelerated in June.

On Monday, the USD/CHF reversed its course and cleared daily gains, retreating to the 0.8870 area in negative territory. No high-tier data will be released, and several Federal Reserve (Fed) speakers will deliver speeches. Meanwhile, markets continue to asses Friday’s Nonfarm Payrolls report from the US, which came in mixed, ahead of inflation data to be released on Wednesday.

US NFPs came in mixed, eyes on CPI data

On Friday, the US Bureau of Labor Statistics revealed that the number of new jobs created in all non-agricultural businesses fell to 209K MoM in June while markets expected 225K, lower than the previous figure of 306K. However, wages increased by 0.4% MoM in the same month, higher than the 0.4% expected.

As a reaction, the US faced severe selling pressure as the lower-than-expected job creation figures made investors bet on a less aggressive Fed. That said, sticky wage inflation may pressure the Fed to maintain its aggressive stance and limit USD losses. In addition, the Consumer Price Index (CPI) data will provide additional information regarding the inflation outlook in the US. As for now, markets are expecting the headline figure to fall to 3.1% YoY in June and the Core figure to 5% from their previous 4% and 5.3% figures, respectively.

Regarding expectations, markets have already priced in a 25 basis point (bps) hike in the next July meeting, while the odds of another hike stand around 40%. Fed officials Loretta Mester and Mary Daly were on the wires on Monday and showed themselves hawkish, expressing that inflation is unacceptably high and that further hikes are appropriate but failed to boost the USD.

USD/CHF Levels to watch

The daily chart suggests that the outlook favours the CHF over the USD in the short term. The Relative Strength Index (RSI) points south in negative territory, while the Moving Average Convergence Divergence (MACD) prints higher red bars, indicating a growing selling momentum. In addition, the pair trades below the 20,100 and 200-day Simple Moving Averages (SMAs)

Support Levels: 0.8860,0.8830,0.8820

Resistance Levels: 0.8915, 0.8956 (20-day SMA), 0.8995