- USD/CHF continues to lose ground for the second day in a row and falls to a three-week low.
- Reducing bets on a more aggressive Fed rate hike weighs on the dollar and puts some pressure on it.
- The lack of tracking sales warrants some caution before positioning yourself for further losses.
The USD/CHF pair remains under some selling pressure for the second day in a row on Wednesday and pulls back further from its highest level since May 2019 hit last week. The bearish trajectory drags cash prices to a three-week low around the 0.9855 area during the first half of the European session and is fueled by the heavily offered tone surrounding the US dollar.
Indeed, the dollar index, which measures the greenback’s performance against a basket of currencies, sank to a one-month low amid declines from more aggressive Fed policy tightening. Investors they now expect the US central bank to be forced to soften its hawkish stance amid signs of a slowdown in the world’s largest economy. This follows from a further decline in US Treasury yields, which continues to weigh on the dollar and puts downward pressure on the USD/CHF pair.
That said, the recent rally in global equity markets undermines the safe haven of the Swiss franc and helps the USD/CHF find some support near the mid-0.9800. Furthermore, traders may be reluctant to make aggressive bets and would prefer to wait for a less aggressive change from the US central bank. Therefore, the focus will be on next week’s two-day FOMC monetary policy meeting, which will play a key role in influencing the dollar and providing a further directional boost to major currencies.
Meanwhile, US new home sales data will be released on Wednesday, which, along with US bond yields, will boost demand for the dollar. Additionally, the broader market risk sentiment could lead to short-term trading opportunities around the USD/CHF pair. However, the focus will be on Thursday’s important US macroeconomic data, including the second quarter GDP report. Market attention will then turn to next week’s FOMC meeting and US NFP, which will be closely watched.
Technical levels to watch
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.
