- USD/CHF attracts some buying on dips on Monday and reverses much of its intraday losses.
- Optimism about US-China relations weighs on the CHF’s safe haven and lends it some support.
- Issues related to the US debt ceiling weigh on the dollar and could prevent a meaningful recovery.
The USD/CHF pair recovers much of its intraday losses to hit multi-day lows and is trading around the 0.8975-0.8970 zone, down close to 0.25% on the day, during the early hours of the North American session.
Against a backdrop of concerns about a slowdown in the global economy, the surprise backdrop to the US debt ceiling negotiations weighed on investor sentiment and prompted some safe-haven flows into the Swiss franc (CHF). Aside from this, the US Dollar (USD) price action is putting some downward pressure on the USD/CHF pair. Problems with the US debt ceiling, coupled with less aggressive comments from Federal Reserve (Fed) Chairman Jerome Powell on Friday, triggered a further decline in US Treasury yields. US and kept USD bulls on the defensive.
Speaking at a Fed research conference, Powell said it was not yet clear whether interest rates will have to rise further amid uncertainty about the impact of past rate hikes and the recent tightening of bank credit. On the other hand, the president of the Minneapolis Fed, Neel Kashkari, has made his opinion known on Monday, stating that the decision to raise the interest rate once more in June or to pause it is very close. That being said, optimism about a possible improvement in US-China relations supports the USD/CHF pair and helps limit any further losses.
Spot prices attract some buyers near the 0.8940 region, though any significant rise still looks elusive ahead of a key meeting between President Joe Biden and Republican House Speaker Kevin McCarthy to discuss the debt ceiling. Apart from this, the US bond yields will influence the USD price dynamics and provide some momentum to the USD/CHF pair in the absence of any relevant US economic releases to move the market. This, coupled with the broader risk sentiment should allow traders to take advantage of short-term opportunities around the pair.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
