• USD/CHF prints mild gains after bouncing off the lowest level since 2015, picking up bids of late.
• Swiss Real Retail Sales growth improves to 1.8% YoY in June, versus -0.9% prior.
• US Dollar Index grinds near three-week high as bulls lack follow-through ahead of Fed’s favorite inflation.
• Market’s cautious optimism, lackluster yields also prod Swiss Franc pair after a volatile week.

USD/CHF rises to the highest level in two weeks, near 0.8710 at the latest, as it stretches the previous day’s rebound from the lowest levels since 2015 amid the early hours of Friday’s European session. In doing so, the Swiss Franc (CHF) pair cheers the recently published data at home as the US Dollar edges higher ahead of the top-tier data.

Swiss Real Retail Sales growth improves to 1.8% YoY in June compared to the previous contraction of 0.9%. With this, the Swiss National Bank’s (SNB) hawkish bias gains credence.

However, the previous day’s positive surprise from the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) and the Durable Goods orders for June renew calls for the Federal Reserve’s (Fed) rate hike in September and favor the US Dollar to remain firmer despite latest inaction.

It’s worth noting that the cautious optimism in the market, as portrayed by the mildly bid US and European stock futures, prod the US Dollar Index (DXY) at a three-week high. That said, the greenback’s gauge versus the six major currencies rallied the most in four months the previous day and triggered the USD/CHF pair’s run-up from the multi-year low after upbeat US data and strong yields.

Earlier in the week, the Fed’s inability to convince hawks, despite a 0.25% rate hike and showing readiness for a September rate lift, drowned the US Dollar before the previous day’s run-up.

Looking ahead, a light calendar at home and cautious mood before the Fed’s favorite inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for June, expected 4.2% YoY versus 4.6% prior, could prod the USD/CHF traders. In a case where the US inflation data print upbeat outcomes, the Swiss Franc pair will extend the latest rebound from the multi-year low.

Technical analysis

A daily closing beyond the weekly high of around 0.8700 becomes necessary to extend the latest corrective from the multi-year low toward May’s bottom of around 0.8820.