- A combination of factors dragged USD / CHF lower for the third day in a row on Monday.
- The risk aversion momentum benefited the safe haven CHF and put downward pressure.
The pair USD/CHF It fell in the early part of the European session and was last seen hovering near the lower limit of its daily trading range, around the 0.9250 region.
A combination of factors did not help the USD / CHF pair to capitalize on Friday’s modest bounce of around 25 pips, but instead triggered new selling on the first day of a new trading week. The momentum of risk aversion in the markets supported the demand for the safe haven Swiss franc. This, coupled with a modest weakness in the US dollar, dragged the pair lower for the third day in a row.
Concerns that China’s Evergrande debt crisis could spread to the entire real estate sector in the world’s second-largest economy dampened investor appetite for perceived riskier assets. This was evident by a generally weaker tone in equity markets and extended some support to traditional safe haven currencies and acted as a headwind for the USD / CHF pair.
On the other hand, the USD extended last week’s retracement drop from the highest level since September 2020 and remained depressed during the first half of Monday’s trading action. This was seen as another factor that put some pressure on the USD / CHF pair. That said, the prospects for an early policy tightening by the Fed should help limit USD losses.
Investors appear to be convinced that the Fed will begin reducing its massive pandemic-era stimulus as early as November. The market also appears to have begun to weigh in on the possibility of a Fed interest rate hike in 2022. This, coupled with a new boost in US Treasury yields, should help the USD to attract some downside buying and support USD / CHF.
There is no major market-moving economic data released in the US on Monday. Therefore, US bond yields will play a key role in influencing USD price dynamics. Traders could follow the broader market risk sentiment signals to seize some short-term opportunities around USD / CHF.
Technical levels
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