USD/CHF slides to multi-day lows, around 0.9220 region ahead of Fed
|- USD/CHF witnessed some selling for the third successive session on Wednesday.
- A subdued USD price action seemed to be the only factor exerting some pressure.
- A combination of factors should help limit losses ahead of the key FOMC decision.
The USD/CHF pair edged lower through the first half of the European session and dropped to four-day lows, around the 0.9220 region in the last hour.
The pair extended this week's retracement slide from the 0.9330-35 region, or the highest level since April 6 and witnessed some follow-through selling for the third consecutive session on Wednesday. The downtick lacked any obvious catalyst and could be solely attributed to a subdued US dollar price action amid some repositioning trade ahead of the crucial FOMC policy decision.
That said, a combination of factors could extend some support to the USD/CHF pair and help limit any deeper losses heading into the key central bank event risk. Expectations for an imminent Fed taper announcement should continue to act as a tailwind for the greenback. This, in turn, should hold traders from placing aggressive bearish bets around the major amid the risk-on impulse in the markets, which tends to undermine demand for the safe-haven Swiss franc.
China's struggling property giant Evergrande Group said it would pay the bond interest due on Thursday and Boosted the global risk sentiment. This was evident from a generally positive tone around the equity markets. Hence, it will be prudent to wait for some follow-through selling before confirming that the USD/CHF pair has already topped out in the near term.
The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting. Investors will look for clues about the likely timing of the Fed's tapering plan. Apart from this, the latest economic projections, especially the so-called dot plot, will influence the USD price dynamics and provide a fresh directional impetus to the USD/CHF pair.
Technical levels to watch
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