- USD/CHF witnessed heavy selling for the second straight session on Thursday.
- The ongoing USD corrective slide was seen as a key factor exerting pressure.
- The risk-on mood did little to undermine the safe-haven CHF or lend support.
The emergence of fresh selling around the USD dragged the USD/CHF pair to four-week lows, sub-0.9200 levels during the early part of the European session.
Despite a slightly stronger US CPI report, investors seem unconvinced about a sustained period of inflation. This was evident from a further decline in the longer-term US Treasury bond yields, which triggered a sharp US dollar corrective slide from 13-month tops. The pullback extended through the first half of the trading action on Thursday, which, in turn, dragged the USD/CHF pair lower for the second successive day.
Meanwhile, the minutes of the September FOMC monetary policy meeting revealed that the Fed remains on track to begin tapering its bond purchases in 2021. Moreover, a growing number of policymakers were worried about the continuous rise in inflationary pressure, forcing investors to bring forward the likely timing of a potential rate hike. This, however, did little to impress the USD bulls or lend any support to the USD/CHF pair.
Even the risk-on impulse in the equity markets, which tends to undermine demand for the traditional safe-haven Swiss franc, failed to ease the intraday bearish pressure around the USD/CHF pair. With the latest leg down, the pair has now reversed over 100 pips from levels just above the 0.9300 round-figure mark. A sustained break below the 0.9225-20 region might have already set the stage for an extension of the ongoing depreciating move.
Market participants now look forward to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims. This, along with the US bond yields and scheduled speeches by influential FOMC members, will influence the USD and provide a fresh impetus to the USD/CHF 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
EUR/USD hovers around 1.0700 ahead of German IFO survey
EUR/USD is consolidating recovery gains at around 1.0700 in the European morning on Wednesday. The pair stays afloat amid strong Eurozone business activity data against cooling US manufacturing and services sectors. Germany's IFO survey is next in focus.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price flat lines above $2,300 mark, looks to US macro data for fresh impetus
Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from over a two-week low – levels just below the $2,300 mark – and oscillates in a narrow range heading into the European session on Wednesday.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin (WLD) price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.