- A combination of factors dragged USD/CHF to a new monthly low on the first day of a new week.
- A general weakness of the USD was considered a key factor that acted as a headwind for the pair.
- The initial optimism in the markets faded quickly and boosted the demand for the CHF as a safe haven.
The pair USD/CHF fell to a new monthly low during the first half of the European session and was last seen flirting with the 200-day SMA around the 0.9175 area.
The pair struggled to capitalize on its initial rally, instead finding fresh offers near the 0.0.9215 region on Monday and now looks poised to extend its recent decline witnessed over the last week or so. The US dollar came under renewed selling pressure amid expectations that the Fed would take a less aggressive policy stance to combat stubbornly high inflation. Apart from this, the tensions between Russia and the Ukraine benefited the relative safe haven status of the Swiss franc and further contributed to the USD/CHF pair’s intraday decline.
The initial bullish move in stock markets fizzled out fairly quickly after a Kremlin spokesman said there were no concrete plans yet for a meeting between Putin and Biden. Apart from this, market fears of an impending Russian invasion of Ukraine continued to lend some support to traditional haven assets. In fact, satellite images showed multiple new deployments of Russian military units near the Ukrainian border.
In addition, Russia extended military exercises in Belarus that were due to end on Sunday. Therefore, the focus will be on the upcoming meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov, scheduled for February 24. In the meantime, investors will closely monitor developments related to the Ukraine conflict, which will influence risk sentiment and give the USD/CHF pair some momentum.
From a technical perspective, a sustained break below a technically significant 200-day SMA could be seen as a new trigger for bearish traders. This, in turn, will set the stage for a further short-term depreciation move for the USD/CHF pair amid the absence of relevant economic releases in the market. The pair could then accelerate the bearish momentum and head back to challenge the round 0.9100 level in the near term.
Technical levels
Source: Fx Street
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