- USD / CHF was down for the third day in a row and fell to a nearly three-week low on Friday.
- A modest USD weakness was seen as a key factor putting some downward pressure on the pair.
- Risk appetite undermined the safe-haven CHF and limited losses amid tight end-of-year liquidity.
The pair USD/CHF it remained depressed during the first half of the European session and was last seen near a three-week low, around the 0.9170-65 region.
The pair was down for the third day in a row on Friday and extended this week’s rejection slide from the 0.9250 resistance zone. The slide was solely sponsored by a modest weakness in the US dollar, and the bears are now looking to extend the bearish trajectory further below the very important 200-day SMA.
That said, a generally positive tone in equity markets undermined the safe-haven Swiss franc and extended some support to the USD / CHF pair. The overall risk sentiment remained well supported by recent studies, which indicate that Omicron infections are less likely to lead to hospitalization.
Aside from this, the Fed’s aggressive outlook acted as a tailwind for the dollar and should help limit deeper losses for the USD / CHF pair, at least for now. It is worth remembering that the so-called dot plot indicated that the Fed could raise interest rates at least three times next year.
From a technical perspective, the ongoing decline dragged the USD / CHF pair below the support marked by the lower end of a nearly three-week trading range. A subsequent dip below the 0.9160-55 support area will reaffirm the negative bias and pave the way for a further short-term depreciation move.
The divergence between the fundamental backdrop and the technical setup warrants some caution before placing aggressive directional bets. Furthermore, the illiquid conditions at the end of the year suggest that the USD / CHF pair is more likely to enter a consolidation phase and oscillate in a tight range on Christmas Eve.
Technical levels
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