USD/CHF retreats below 0.99 as Trump's comments weigh on market sentiment
|- US Pres. Trump warns over possible tariffs on European cars.
- Wall Street pares part of early gains.
- US Dollar Index stays below mid-94s.
The USD/CHF pair, which was at the beginning of a modest recovery in the early NA session, lost its traction and dropped below the 0.99 in the last 30 minutes and was last seen trading at 0.9897, down 0.22% on the day.
US President Trump tweeted out a warning message to Europe, saying that they would start imposing 20% tariffs on all of their cars if the barriers and tariff placed by the European Union on the U.S. and its great companies and workers were not soon broken down and removed.
A report analyzing this announcement stated that if this tariff materialized, European cars would cost €10,000 more on average. Carmakers' shares quickly dropped on Trump's tweet and weighed on Wall Street. Major equity indexes in the United States started paring their early gains, pointing to a weakening market sentiment.
On the other hand, risk aversion increased the demand for safer Treasury bonds and forced the 10-year reference's yields to erase its daily gains making it difficult for the greenback to regain its strength. As of writing, the US Dollar Index was at 94.35, down 0.21% on the day. Meanwhile, disappointing manufacturing and service sector PMI figures in the United States released by Markit is putting extra pressure on the buck.
Technical levels to consider
The immediate support for the pair could be seen at 0.9890 (20-DMA) ahead of 0.9840 (Jun. 13 low) and 0.9790 (Jun. 7 low).On the upside, resistances are located at 0.9935 (50-DMA), 1.0000 (parity/psychological level) and 1.0055 (May 9 high).
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