Ella 
USD/CHF bears lacked momentum heading into Thursday’s European session, with the pair failing to extend its first day of losses in four days and now trading near 0.8665-70. The latest decline in the exchange rate may be related to the retreat of the dollar ahead of the most important US inflation data and the turning of market sentiment, even if the news from China is not conducive to risk sentiment.
The U.S. dollar index remained under pressure around 102.45 after two days of gains ended the previous day. The dollar against six major currencies confirmed market caution ahead of U.S. inflation data and light data.
It’s worth noting that S&P 500 futures edged higher and Treasury yields edged higher, pointing to cautious optimism, even as headlines pointed to looming fears of a trade war between the U.S. and China and geopolitical conflict between the U.K. and China.
Recently, the British “Financial Times” (FT) announced that British Prime Minister Rishi Sunak is weighing whether to follow the example of US President Joe Biden and limit foreign investment in China’s technology sector, including artificial intelligence, chips and quantum computing. . According to Reuters, the move comes after U.S. President Joe Biden signed the highly anticipated bill allowing the U.S. Treasury Department to ban or limit certain U.S. investments in Chinese entities.
China’s Ministry of Commerce expressed serious concern and said it has the right to take measures against the U.S. technology investment ban. However, this issue has been discussed for a long time, and the measures announced are slightly looser than originally planned, which in turn keeps the market cautiously optimistic.
More broadly, hopes of an end to hawkish U.S. monetary policy appear to be underpinning USD/CHF’s decline, largely due to recent dismal U.S. jobs data and today’s July CPI report. An early sign of a downturn. That said, the upbeat outcome of US CPI annual growth forecasts is expected to rise to 3.3% from 3.0% previously, which could shatter concerns that the Fed is close to its rate peak, which in turn could evoke buying in USD/CHF.
Unless the daily closes below the two-week horizontal support at 0.8700, USD/CHF bulls will still challenge the descending resistance line from November 2022, near 0.8825.
