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USD/CHF flirts with daily low, bears await break below 0.9600

  • USD/CHF meets fresh supply on Wednesday and falls to the 0.9600 zone.
  • Recession fears offer some support to the safe haven CHF and put pressure on the pair.
  • Softer US bond yields act as a dollar headwind and contribute to modest weakness.
  • Aggressive expectations from the Fed should limit any significant decline in the USD and the pair.

The pair USD/CHF It attracts some selling near the 0.9660-0.9665 region on Wednesday and falls to a fresh daily low during the first half of the European session. The bears are now looking for a sustained break below the 0.9600 round figure before positioning for an extension of the overnight retracement from around 0.9700, or one-month highs.

Investors remain concerned about a slowdown in the global economy on the back of persistently high inflation, tightening financial conditions and headwinds stemming from COVID-19 lockdowns in China. This is evident in a generally weaker tone around equity markets, offering some support to the safe haven Swiss franc and putting some downward pressure on the USD/CHF pair.

However, the decline seems cushioned by the appearance of some US dollar purchases, bolstered by Fed expectations. Investors seem convinced that the Federal Reserve will maintain its tightening policy and have been pricing in at least one rate hike. 50 basis points at the September FOMC meeting. That said, a modest pullback in US Treasury yields caps dollar gains.

The mix of fundamental factors warrants some caution before positioning yourself in a firm direction in the short term. Traders may also prefer to wait on the sidelines ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole symposium on Friday. Market participants brace for a tougher message and will be looking for clues about a 75 basis point Fed rate hike in September.

Meanwhile, on Wednesday, traders could follow the US economic docket, with Durable Goods Orders and Pending Home Sales data due later in the early American session. This, along with US bond yields, could weigh on the dollar. Aside from this, the overall market risk sentiment should help produce short-term trading opportunities around the USD/CHF pair.

Technical levels to watch

USD/CHF

Panorama
Last Price Today 0.9652
Today’s Daily Change 0.0014
Today’s Daily Change % 0.15
Today’s Daily Opening 0.9638
Trends
20 Daily SMA 0.9539
50 Daily SMA 0.9627
100 Daily SMA 0.9653
200 Daily SMA 0.9445
levels
Previous Daily High 0.9692
Previous Daily Minimum 0.9603
Previous Maximum Weekly 0.9598
Previous Weekly Minimum 0.9409
Monthly Prior Maximum 0.9886
Previous Monthly Minimum 0.9502
Daily Fibonacci 38.2% 0.9637
Daily Fibonacci 61.8% 0.9658
Daily Pivot Point S1 0.9597
Daily Pivot Point S2 0.9555
Daily Pivot Point S3 0.9507
Daily Pivot Point R1 0.9686
Daily Pivot Point R2 0.9734
Daily Pivot Point R3 0.9775

Source: Fx Street

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