USD / CHF falls to four-week lows and looks vulnerable near the 0.9200 level

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  • USD / CHF is witnessing strong selling for the second day in a row on Thursday.
  • The current corrective decline in the USD is seen as a key factor putting pressure on the pair.
  • Risk appetite does little to weigh on the safe-haven CHF or support the pair.

The emergence of new sales around the US dollar has dragged the USD / CHF pair to four-week lows below the 0.9200 level during the first part of the European session on Thursday.

Despite a slightly stronger US CPI report, investors appear unconvinced of a sustained period of inflation. This was evidenced in a further decline in US Treasury yields long-term, triggering a strong corrective decline in the US dollar from 13-month highs. The pullback extended through the first half of trading action on Thursday, which in turn has dragged the USD / CHF pair lower for the second day in a row.

Meanwhile, minutes from the FOMC’s September monetary policy meeting revealed that the Fed is still on track to start reducing its bond purchases in 2021. In addition, a growing number of monetary policy makers were concerned about the continuing rise in inflationary pressure, forcing investors to anticipate the likely timing of a possible rate hike. This, however, did little to impress the USD bulls or lend any support to the USD / CHF pair.

Even risk appetite in equity markets, which tends to weigh on demand for the traditional safe haven Swiss franc, has failed to ease the intraday downward pressure around USD / CHF. With the latest move to the downside, the pair has now lost more than 100 pips from levels just above 0.9300. A sustained break below the 0.9225-20 region may have already set the stage for an extension of the current bearish move..

Market participants are now awaiting the US economic calendar, which includes the release of the IPP producer price index and weekly initial jobless claims. This, coupled with US bond yields and scheduled speeches from influential FOMC members, will sway the USD and could generate further momentum to the USD / CHF pair.

USD / CHF technical levels

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