USD/CHF slides to over one-week lows, further below mid-0.9100s
|- A combination of factors dragged USD/CHF lower for the second successive session on Monday.
- COVID-19 jitters benefitted the safe-haven CHF and exerted some downward pressure on the pair.
- The repricing of the Fed’s taper plan weighed on the USD and further contributed to the selling bias.
The USD/CHF pair edged lower during the early part of the European session and dropped to over one-week lows, around the 0.9130-25 region in the last hour.
The pair extended last week's retracement slide from the vicinity of mid-0.9200s, or over one-month tops and witnessed some follow-through selling for the second consecutive session on Monday. The risk-off impulse in the markets benefitted the safe-haven Swiss franc and dragged the USD/CHF pair lower amid a subdued US dollar price action.
Investors remain worried about the potential economic fallout from the fast-spreading Delta variant of the coronavirus. This, along with disappointing Chinese macro data, fueled worries about slowing global economic recovery and weighed on investors' sentiment. This, in turn, drove flows towards traditional safe-haven assets, including the CHF.
On the other hand, uncertainty over the likely timing for policy tightening by the Fed kept the US dollar bulls on the defensive. As investors looked past blockbuster US jobs report for July, signs of moderating inflationary pressure and a sharp fall in the US consumer confidence forced investors to scale back their bets for an early tightening by the Fed.
This was evident from the ongoing decline in the US Treasury bond yields, which was seen as another factor that undermined the greenback. The market focus now shifts to the release of the US monthly Retail Sales figures and Fed Chair Jerome Powell's scheduled speech on Tuesday. This, along with the FOMC monetary policy meeting on Wednesday, will influence expectations about the next policy move by the Fed.
There isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will continue to play a key role in driving the USD. Traders might further take cues from the broader market risk sentiment and developments surrounding the coronavirus saga for some short-term opportunities around the USD/CHF pair.
Technical levels to watch
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