USD/CHF directs three-day losing streak towards 0.9000 as Swiss GDP, US Consumer Confidence loom

• USD/CHF extends Friday’s pullback from seven-week high, remains pressured around intraday low.
• Market’s cautious optimism, positioning before the key data weigh on US Dollar.
• Swiss Q1 GDP, US CB Consumer Confidence will decorate calendar.
• Headlines surrounding US debt-ceiling extension, full markets’ reaction to shift in risk catalysts will be the key.

USD/CHF drops for the third consecutive day after refreshing a multi-week high as it prints mild losses around 0.9035 amid early Tuesday morning in Europe.

Swiss Franc (CHF) buyers cheer the broad US Dollar pullback amid mildly upbeat sentiment. Also likely to have favored the pair sellers could be the consolidation ahead of today’s key Swiss Gross Domestic Product (GDP) data for the first quarter (Q1) of 2023, as well as the US Conference Board’s (CB) Consumer Confidence for May.

That said, the US Dollar Index (DXY) reverses from a six-month-old resistance line to print the first daily loss in seven around 104.10 as firmer sentiment weigh on the US Dollar’s haven demand.

Underpinning the market’s cautious optimism is the return of the traders in major bourses after a long weekend and then the reaction to the US policymakers’ deal on the debt-ceiling extension to January 2025. Though, fears emanating from some of the US policymakers, mostly Republicans, are against the compromises made to their previous demands to reach the deal. The policymakers also show readiness to challenge the agreement in the House, as well as in the Senate, which in turn prods the market’s previous risk-on mood and keeps the US Dollar on the front foot.

“A handful of hard-right Republican lawmakers said on Monday they would oppose a deal to raise the United States' $31.4 trillion debt ceiling, in a sign that the bipartisan agreement could face a rocky path through Congress before the US runs out of money next week,” said Reuters.

While portraying the mood, the S&500 Futures print mild gains around 4,220 after retreating from the yearly high the previous day whereas the US Treasury yields drop by the press time.

Looking forward, Swiss Q1 GDP, expected to improve to 0.1% QoQ versus 0.0% prior, will offer immediate directions to the USD/CHF pair ahead of the US CB Consumer Confidence for May, expected to ease from 101.30 prior readings. Above all, Wednesday’s US House voting on the debt-ceiling agreement and the Senate’s approval for the same before June 05, as well as Friday’s US jobs report, become the key for the USD/CHF pair traders to watch for clear directions.

Technical analysis

A downside break of a three-week-old ascending support line, now immediate resistance near 0.9045, directs USD/CHF bears toward the 50-DMA level surrounding the 0.9000 threshold.