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USD/CHF approaches multi-month lows after US GDP Revisions, Fed Begie book

  • The USD/CHF is navigating towards the 0.8700 level, seeing a 0.45% loss.
  • The pair tallied a 4-day losing streak, and indicators flash oversold conditions.
  • Thomas Barkin from the Fed warned markets about further tightening and stubborn inflation.
  • US Q3 GDP was revised upwards, but the Fed's Beige book remarked a slowdown in the US economic activity.

The USD/CHF pair has seen further losses in Wednesday's session, currently trading around 0.8730, its lowest since August. Such downward movement has been largely driven by a broad US weakness amid declines in the US Treasury yields. On the data front, the US revised its Q3 Gross Domestic Product (GDP) to 5.2%, and the Federal Reserve’s (Fed) beige book signalled that the American economy slowed  up to November 18.

Regarding expectations on the Fed, Barkin's recent statements regarding the potential for another interest rate hike and doubts about achieving the desired inflation rate of 2% have unsettled the markets, dampening the excitement that followed the last US Consumer Price Index (CPI). The markets had previously been betting on the Federal Reserve nearing the end of its tightening cycle, which has significantly weakened the USD.

That being said, the bank still remains data-dependant, and before the December meeting, it will receive an additional Consumer Price Index (CPI) and a jobs report. On Thursday, the US will report on the Core Personal Consumption Expenditures (PCE) index from October, which investors will closely watch to continue placing their bets on the next Fed moves.

In the meantime, the US government bond yields erased some losses but are still weak. The 2-year rate stands at 4.64%, its lowest since July, and the 5 and 10-year yields are seen at 4.21% and 4.27%, respectively, at their lowest since September.


USD/CHF levels to watch

The indicators on the daily chart reflect bearish momentum for the USD/CHF. The Relative Strength Index (RSI) displays oversold conditions, which traditionally signals a bear-dominated market, although could mean a reversal in the short term. This is reinforced by the asset's positioning below the 20, 100, and 200-day Simple Moving Averages (SMAs), further supporting the idea that the bears are firmly in control in the longer-term perspective. Concurrently, the Moving Average Convergence Divergence's (MACD) rising red bars signal increased near-term selling momentum. 

Support Levels: 0.8700, 0.8680, 0.8650.
Resistance Levels: 0.8800, 0.8850, 0.8890 (100-day SMA).


USD/CHF daily chart

USD/CHF

Overview
Today last price0.8729
Today Daily Change-0.0053
Today Daily Change %-0.60
Today daily open0.8782
 
Trends
Daily SMA200.8924
Daily SMA500.9004
Daily SMA1000.8893
Daily SMA2000.8977
 
Levels
Previous Daily High0.8819
Previous Daily Low0.8761
Previous Weekly High0.8875
Previous Weekly Low0.8811
Previous Monthly High0.9244
Previous Monthly Low0.8888
Daily Fibonacci 38.2%0.8783
Daily Fibonacci 61.8%0.8797
Daily Pivot Point S10.8756
Daily Pivot Point S20.873
Daily Pivot Point S30.8699
Daily Pivot Point R10.8814
Daily Pivot Point R20.8845
Daily Pivot Point R30.8871

Author

Patricio Martín

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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