- USD / CHF came under renewed selling pressure on Friday, falling to fresh multi-week lows.
- The USD is struggling to capitalize on its intraday gains despite a strong recovery in US bond yields.
- The prevailing sentiment of risk appetite weighs on the safe-haven CHF and helps limit any further decline in the pair.
The pair USD / CHF has fallen to fresh six-week lows, around the 0.9180-75 region during the European session on Friday, although it has recovered a few pips thereafter. At the time of writing, the pair is trading around the 0.9187 level, shedding 0.40% on the day.
After the directionless price movements of the previous day, the pair encountered new sales on the last trading day of the week and did not appear to be affected by the modest strength of the US dollar. The USD has held supported by upbeat US economic data on Thursday, which indicated that the recovery is on track, and has received an additional boost from a strong rebound in US Treasury yields.
It is worth reporting that 10-year US government bond yield has fallen to a one-month low amid expectations that the Fed will keep interest rates near zero for a longer period. Investors now seem convinced with the Fed’s view that higher inflation will be transitory And they have also started looking through the headline-grabbing US economic publications.
This, in turn, has capped strong gains for the USD and led to a modest intraday pullback, which has been considered a key factor that has caused some new sales around the USD / CHF pair. However, underlying bullish sentiment in financial markets has weighed down demand for the safe-haven Swiss franc. and it has helped limit any further losses in the pair, at least for now.
Therefore, it will be prudent expect sustained weakness below the very important 200-day SMA before positioning for any other short-term bearish moves. A convincing breakout will set the stage for an extension of the recent sharp pullback from multi-month highs around the 0.9470-75 region touched in early April.
Market participants are now awaiting the US economic calendar, which features the release of housing starts, building permits and the University of Michigan’s preliminary consumer sentiment index. This, along with US bond yields, will influence the USD. Apart from this, the broader market risk sentiment could further contribute to generating some trading opportunities around the USD / CHF pair.
USD/CHF niveles
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