- USD/CHF breaks a two-day winning streak amid fresh selling around the dollar.
- Expectations of a smaller Fed rate hike in February turn out to be a key factor weighing on the dollar.
- A positive risk tone weighs on the safe-haven CHF and could help limit the pair’s losses.
The pair USD/CHF moves lower on Tuesday and appears to have stalled the recent rally from below 0.9100 for now, or its lowest since November 2021 touched last week. The pair remains on the defensive during the European session and is currently near the daily lows around the 0.9200 level.
The US dollar is under renewed selling pressure amid the prospects for a less aggressive tightening of monetary policy by the Fed, which turns out to be a key factor acting as a headwind for the USD/CHF pair. In fact, investors seem convinced that the US central bank will soften its hawkish stance on signs of easing inflationary pressures. On the other hand, current market prices indicate a higher probability of a 25 basis point Fed rate hike in February, keeping the recent rise in US Treasury yields at bay. weighs on the USD.
For its part, the USD/CHF pair remains stable, at least for now, amid a positive risk tone, which tends to weaken demand for the Swiss franc (CHF), a safe haven currency. Nevertheless, the fundamental undercurrent appears to be leaning firmly in favor of the bears and supports prospects for a continuation of the recent bearish trajectory observed since the beginning of November 2022. Therefore, any positive intraday move is likely to attract new sellers at higher levels and risks fading rather quickly.
Market participants are now looking to the US economic calendar, where preliminary figures for the Richmond Fed’s manufacturing index and PMI will be released. This, along with US bond yields, will influence USD price dynamics and provide some momentum to the USD/CHF pair. Apart from this, broader risk sentiment could help produce near-term opportunities. However, traders may refrain from entering aggressive positions and prefer to stay on the sidelines as attention remains focused on the FOMC policy meeting scheduled for next week.
USD/CHF technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
