- The dollar fails at 0.9930 and returns to the 0.9855 support zone.
- Hopes of a slowdown by the Fed weigh on the dollar.
- Downside risks have increased below 0.9925.
The USD resumed its downward trend against the Swiss franc on Wednesday. The mild recovery attempt witnessed during the European session has been capped at 0.9930, with the pair giving back gains later to test the 0.9855 zone at the time of writing.
Dollar Sinks on Fed Pivot Expectations
The dollar depreciates for the second day in a row as investors begin to price in a slowdown in the Fed’s tightening path. A recent bout of negative indicators in the US has fueled concerns about the impact of the Fed’s hawkish policy on economic growth.
The market is still expecting a 75 basis point rise next week, although expectations for December have been lowered to a 0.50% rise. This is hurting the dollar, which had been rising in recent months, buoyed by the pace of radical Fed tightening.
USD/CHF: Downside risks have risen below 0.9925
Below 0.9925, the pace of consolidation of the last three weeks has been broken, adding negative pressure to the pair. Immediate support is now found at 0.9850 (200-day SMA) ahead of 0.9785 (Oct 4-6 lows) and 0.9740 (Sep 29 low).
To the upside, the pair should break back above the aforementioned 0.9925 and the 100-day SMA at 0.965 to relieve negative pressure before turning its attention to the psychological 1.0000 level.
Technical levels to watch
Source: Fx Street
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