USD/CHF drops to one-week low, further below 0.8900 ahead of FOMC decision

USD/CHF drifts lower for the second straight day and is pressured by a combination of factors.
Fresh fears of the US banking crisis benefit the CHF and weigh on the pair amid a weaker USD.
Investors now look to the US macro data for some impetus ahead of the crucial FOMC decision.

Haresh Menghani FXStreet

The USD/CHF pair extends the overnight downfall from the vicinity of the 0.9000 psychological mark, or a nearly two-week high and remains under heavy selling pressure for the second successive day on Wednesday. The downward trajectory remains uninterrupted through the first half of the European session and drags spot prices to a one-week low, around the 0.8875 region in the last hour.

Concerns that several other regional US lenders were facing solvency issues fuel worries about a full-blown banking crisis and boost demand for traditional safe-haven Swiss Franc (CHF). Apart from this, the ongoing US Dollar (USD) retracement slide from a three-week high touched on Tuesday further contributes to the offered tone surrounding the USD/CHF pair. The anti-risk flow, along with the uncertainty over the Federal Reserve's (Fed) rate hike path and worries about a US debt default, keep the US Treasury bond yields depressed and continue to weigh on the Greenback.

The US central bank is widely expected to deliver a 25 bps lift-off at the end of a two-day policy meeting this Wednesday. The US Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday, meanwhile, indicated that the ultra-tight US job market is loosening, which could put less pressure on inflation and allow the Fed to soften its hawkish stance. That said, the CPI in the US is still trending well above the central bank's target range and support prospects for further policy tightening. Hence, the focus will remain glued to the highly-anticipated FOMC decision.

Apart from this, the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting press conference will be scrutinized for clues about the policy outlook. This, in turn, will influence the near-term USD price dynamics and provide a fresh directional impetus to the USD/CHF pair. Heading into the key central bank event risk, traders on Wednesday will take cues from the US economic docket, highlighting the release of the ADP report on private-sector employment and the ISM Services PMI, for short-term opportunities.

Technical levels to watch

USD/CHF

Overview
Today last price	0.8879
Today Daily Change	-0.0053
Today Daily Change %	-0.59
Today daily open	0.8932

Trends
Daily SMA20	0.8967
Daily SMA50	0.9145
Daily SMA100	0.9196
Daily SMA200	0.9441

Levels
Previous Daily High	0.8995
Previous Daily Low	0.8924
Previous Weekly High	0.8976
Previous Weekly Low	0.8852
Previous Monthly High	0.9198
Previous Monthly Low	0.8852
Daily Fibonacci 38.2%	0.8951
Daily Fibonacci 61.8%	0.8968
Daily Pivot Point S1	0.8905
Daily Pivot Point S2	0.8879
Daily Pivot Point S3	0.8834
Daily Pivot Point R1	0.8977
Daily Pivot Point R2	0.9021
Daily Pivot Point R3	0.9048

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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