- USD/CHF has come under intense selling pressure on Thursday following the surprising rate hike by the SNB.
- Risk aversion momentum further benefits safe haven CHF and contributes to the sharp drop.
- The resurgence in demand for the dollar could stop investors before opening aggressive positions and limit losses.
The pair USD/CHF has made a spectacular turnaround and has fallen almost 200 pips from the 0.9990 zone after the Swiss National Bank (SNB) announced its monetary policy decision. The sharp decline, marking the second consecutive day of negative movement, has dragged the pair below the 0.9800 levelwhich is a new weekly low, during the European session.
The SNB surprised markets with a 50 basis point rate hike, placing the official interest rate at -0.25% at the end of the monetary policy meeting in June. In the accompanying monetary policy statement, the SNB left the door open for further rate hikes to counter rising inflationary pressures. This, in turn, gave the Swiss franc a strong boost and triggered aggressive selling around the USD/CHF pair.
Apart of this, risk-off sentiment, represented by a weaker tone in equity markets, further fueled safe-haven flows into CHF and contributed to the decline of the USD/CHF pair. However, a resurgence in US dollar demand could curb investors’ aggressive bearish views and help limit deeper losses in the pair, at least for now.
Market participants now expect the Press conference post-meeting, where comments from SNB Governor Thomas Jordan and members of the Governing Board will influence the CHF. Aside from this, the broader market risk sentiment and USD price dynamics should produce some significant opportunities around the USD/CHF pair.
USD/CHF technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
