- USD/CHF attracts some dip-buying on Monday and reverses a major part of its intraday losses.
- The optimism over US-China relations weighs on the safe-haven CHF and lends some support.
- US debt ceiling woes weigh on the USD and might keep a lid on any meaningful recovery move.
The USD/CHF pair recovers a major part of its intraday losses to a multi-day low and trades around the 0.8975-0.8970 region, down nearly 0.25% for the day, during the early North American session.
Against the backdrop of worries about a global economic slowdown, a surprise breakdown in the US debt ceiling negotiations weigh on investors' sentiment and drives some haven flows towards the Swiss Franc (CHF). Apart from this, subdued US Dollar (USD) price action, exerts some downward pressure on the USD/CHF pair. The US debt ceiling woes, along with less hawkish remarks by Federal Reserve (Fed) Chair Jerome Powell on Friday, triggers a fresh leg down in the US Treasury bond yields and keeps the USD bulls on the defensive.
Speaking at a Fed research conference, Powell said that it is still unclear if interest rates will need to rise further amid uncertainty about the impact of past hikes and recent bank credit tightening. Furthermore, Minneapolis Fed President Neel Kashkari is out with his take this Monday, saying that it was a close call on whether he will be in favour of hiking the policy rate one more time in June or pausing. That said, the optimism over a potential improvement in US-China relations lends support to the USD/CHF pair and helps limit any further losses.
Spot prices attract some buyers near the 0.8940 region, though any meaningful upside still seems elusive ahead of a key meeting between President Joe Biden and House Republican Speaker Kevin McCarthy to discuss the debt ceiling. Apart from this, the US bond yields will influence the USD price dynamics and provide some impetus to the USD/CHF pair in the absence of any relevant market-moving economic releases from the US. This, along with the broader risk sentiment should allow traders to grab short-term opportunities around the pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.