USD/CHF steadies, Trump's tax bill clears Senate, while Hammer Candle signals possible reversal

• US fiscal concerns loom as the Senate passes Trump's "One Big Beautiful Bill Act".
• USD/CHF rebounds after testing a new YTD low below 0.7900 on Tuesday.
• A hammer candle forms on the daily chart, highlighting exhaustion of the trend.

The Swiss Franc (CHF) is steadying against the US Dollar (USD) after recording a new YTD low on Tuesday.

With USD/CHF trading above 0.7900 at the time of writing, prices continue to trade near their lowest levels since September 2011.

The pressure on the US Dollar intensified on Tuesday after the Senate approved President Trump's "One Big Beautiful" tax bill.

After hours of tense negotiations, Vice President JD Vance cast a decisive tiebreaker vote to push the bill through to the next round of voting in the House of Representatives.

The sweeping legislation extends key provisions from the 2017 tax cuts and introduces new deductions, including tax exemptions on tips and overtime. It also boosts funding for defense, border security, and space exploration. 

The bill, also referred to as the GOP mega bill, has triggered unease among bond and currency investors. The budget bill is expected to increase the US deficit by $3.3 trillion over the next decade, raising concerns about the sustainability of US debt. 

However, despite mounting concerns over US fiscal policy and rising government debt, technical factors have temporarily capped the downside move.

USD/CHF rebounds as a Hammer candle signals exhaustion of the bearish trend

The USD/CHF daily chart is showing signs of potential exhaustion in the prevailing downtrend. 

After an extended bearish move, the latest candlestick has formed what resembles a hammer pattern, with a small real body near the top of the range and a long lower wick. This indicates strong intraday selling that was met with buying pressure by the close. 

USD/CHF daily chart

This pattern, emerging just above key support around the 0.7821-0.7827 zone, suggests a potential bullish reversal or short-term relief bounce. 

The Relative Strength Index (RSI) is deeply oversold at 26, reinforcing the idea that bearish momentum may be overextended. 

While the overall trend remains bearish, given that the price is well below both the 10-day and 50-day Simple Moving Averages (SMA). 

The Hammer candle signals that sellers may be losing control. A bullish confirmation candle above the 0.8000 psychological level could validate a temporary recovery, potentially bringing the April low into play at 0.8060.