USD/CHF falls to lowest level since Apr 21, bears flirt with 0.9500 level ahead of Powell

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  • USD/CHF witnessed strong selling on Wednesday and fell to a two-month low.
  • The surprise SNB rate hike in June and recession fears underpinned the safe-haven CHF.
  • Lower US bond yields kept dollar bulls on the defensive and were not supportive.
  • Investors are now awaiting Fed Chairman Powell’s speech for further directional momentum.

The pair USD/CHF came under heavy selling pressure on Wednesday and confirmed a fresh bearish breakout through a near-week-old consolidation range. The bearish trajectory dragged the pair to the lowest level since April 21st, with the bears now expecting sustained weakness below the key psychological 0.9500 level.

The Swiss National Bank’s surprise on June 16, when it unexpectedly raised interest rates by 50 basis points to curb rising inflation, continued to support the Swiss franc. Furthermore, growing concerns about a possible recession fueled some safe-haven flows into the CHF and put additional downward pressure on the USD/CHF pair.

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Elsewhere, a further leg down in US Treasury yields kept US dollar bulls on the defensive and failed to offer any support to the USD/CHF pair. With the latest leg down, spot prices have retraced more than 500 pips from near the yearly high, around the 1.0050 region touched earlier this month.

However, it remains to be seen whether the bears are able to maintain their dominant position or choose to lighten their positions ahead of Fed Chairman Jerome Powell’s speech at the ECB forum in Sintra. Powell’s comments will be scrutinized for clues on the path of monetary policy tightening amid division over the need for more aggressive rate hikes.

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This, in turn, will play a key role in influencing the dollar’s price dynamics and helping investors determine the next leg of a directional move. Meanwhile, a convincing break through 0.9500 would be seen as a new trigger for bearish traders and set the stage for an extension of the USD/CHF pair’s nearly two-week downtrend.

Technical levels

USD/CHF

Panorama
Last Price Today 0.9515
Today’s Daily Change -0.0059
Today’s Daily Change % -0.62
Today’s Daily Opening 0.9574
Trends
20 Daily SMA 0.9716
50 Daily SMA 0.9734
100 Daily SMA 0.9513
200 Daily SMA 0.9365
levels
Previous Daily High 0.9587
Previous Daily Minimum 0.9534
Previous Maximum Weekly 0.9713
Previous Weekly Minimum 0.9522
Monthly Prior Maximum 1.0064
Previous Monthly Minimum 0.9545
Daily Fibonacci 38.2% 0.9567
Daily Fibonacci 61.8% 0.9554
Daily Pivot Point S1 0.9543
Daily Pivot Point S2 0.9512
Daily Pivot Point S3 0.949
Daily Pivot Point R1 0.9597
Daily Pivot Point R2 0.9619
Daily Pivot Point R3 0.965

Source: Fx Street

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