- USD / CHF came under renewed selling pressure and fell to a new monthly low on Tuesday.
- Risk appetite could undermine the safe haven CHF and help limit deeper losses for the pair.
- The break below the 0.9155 zone will validate the breakout of the 200 DMA and set the stage for further losses.
The pair USD/CHF It maintained its offered tone heading into the American session and was last seen trading near the monthly low, around the 0.9160 area.
Having faced rejection near the 0.9200 level on the first day of the current week, the USD / CHF pair encountered new offers on Tuesday and now appears to have found acceptance below the 200-day SMA. The decline lacks an obvious fundamental catalyst and could be attributed to subdued demand for the US dollar, although a combination of factors could help limit deeper losses.
Global risk sentiment remained well supported by reports that the new COVID-19 strain may be less severe than the previous Delta variant. Added to this, a study that Omicron infections are less likely to lead to hospitalization helped ease fears about the economic impact of the continued surge in new cases and further boosted investor confidence.
The bullish market mood was evidenced by a generally positive tone in equity markets, which tends to undermine demand for the safe-haven Swiss franc. The flow of risk was bolstered by a modest rally in US Treasury yields This, coupled with the aggressive outlook from the Fed, could act as a tailwind for the dollar and USD / USD. CHF.
From a technical perspective, sustained weakness below a technically significant 200-day Simple Moving Average (SMA) could be seen as a further trigger for bearish traders. Some follow-up selling below November’s monthly low around the 0.9155 region will reaffirm the negative bias and set the stage for a further short-term depreciation move for the USD / CHF pair.
The next step is the release of the US Richmond Manufacturing Index. Apart from this, US bond yields will influence USD price dynamics and give USD / CHF some boost. Traders will follow the signs of general market risk sentiment to seize some short-term opportunities amid weak year-end liquidity conditions.
Technical levels
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