- A combination of factors drags USD/CHF lower for the fourth day in a row on Monday.
- CHF captures safe-haven money flows and puts downward pressure on the pair amid subdued USD demand.
- The Fed’s dovish outlook favors USD bulls and should help limit deeper losses in the pair.
The pair USD/CHF has fallen to a one-week low during the first half of the European session on Monday, with the bears now waiting for sustained weakness below the 0.9300 level.
The pair had a hard time capitalizing on its modest intraday gains near 0.9350 and moved into negative territory for the fourth day in a row on Monday. The worsening of the situation in Ukraine affected investors’ appetite for perceived riskier assets, which was evident by the prevailing cautious sentiment around equity markets. This, in turn, benefited the safe-haven Swiss franc and put some downward pressure on the USD/CHF pair amid subdued US dollar price action.
The corrective recoil dragged USD/CHF further from the 11-month high, around the 0.9460 region touched last week, although any further decline is more likely to remain limited. The Fed’s outlook, which indicates that could raise rates at the remaining six meetings in 2022, should act as a tailwind for the US dollar. In addition, two influential FOMC members said on Friday that the US central bank needs to take a more aggressive policy stance to combat stubbornly high inflation. This, in turn, favors the USD bulls and should lend support to the USD/CHF pair.
St. Louis Fed President James Bullard explained why he voted for a 50 basis point rate hike, saying the central bank’s reputation was at stake if it didn’t act urgently enough. Additionally, Fed Governor Christopher Waller said the war in Ukraine was the reason he did not push for a 50 basis point rate hike, but that it was definitely on the table for upcoming meetings. Therefore, the spotlight now turns to Fed Chairman Jerome Powell’s scheduled speech later in the American session. Aside from this, geopolitical news could build some momentum around the USD/CHF pair.
USD/CHF technical levels
Source: Fx Street
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