|

USD/CHF drops to over two-month low, below mid-0.8800s as USD selling remains unabated

  • USD/CHF drifts lower for the fourth straight day and drops to over a two-month low.
  • Bets that the Fed will soften its hawkish stance weigh on the USD and exert pressure.
  • A modest recovery in the risk sentiment could undermine the CHF and lend support.

The USD/CHF pair remains under some selling pressure for the fourth straight day on Tuesday and slides to over a two-month low, around the 0.8845 region during the Asian session. 

Speculations that the Federal Reserve (Fed) will soften its hawkish stance sooner rather than later keep the US Dollar (USD) bulls on the defensive near its lowest level since June 22, which, in turn, is seen acting as a headwind for the USD/CHF pair. In fact, two Fed officials said Monday that the end to the current monetary policy tightening cycle is getting close. This led to the overnight pullback in the US Treasury bond yields and turns out to be a key factor weighing on the Greenback.

The Fed speakers, however, noted that the US central bank will likely need to raise interest rates further to bring down inflation. Moreover, the US monthly jobs report released on Friday showed an unexpected dip in the unemployment rate and persistently strong wage growth. This points to still-tight labor market conditions and supports prospects for further policy tightening by the Fed, which should help limit any meaningful downfall for the US bond yields and the Greenback.

Apart from this, a slight recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - could undermine the safe-haven Swiss Franc (CHF) and lend some support to the USD/CHF pair. Moreover, the Relative Strength Index (RSI) on hourly charts is flashing oversold conditions and might hold back traders from placing aggressive bearish bets around the major ahead of the release of the latest US consumer inflation figures on Wednesday. 

In the absence of any relevant market-moving economic releases from the US, a subsequent decline is more likely to find some support near the 0.8820 area, or the YTD low touched in May. The aforementioned fundamental backdrop, however, suggests that the path of least resistance for the USD/CHF pair is to the downside. Hence, any meaningful recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. 

Technical levels to watch

USD/CHF

Overview
Today last price0.8848
Today Daily Change-0.0006
Today Daily Change %-0.07
Today daily open0.8854
 
Trends
Daily SMA200.8957
Daily SMA500.8982
Daily SMA1000.9067
Daily SMA2000.9277
 
Levels
Previous Daily High0.8918
Previous Daily Low0.8852
Previous Weekly High0.9005
Previous Weekly Low0.8876
Previous Monthly High0.912
Previous Monthly Low0.8902
Daily Fibonacci 38.2%0.8877
Daily Fibonacci 61.8%0.8893
Daily Pivot Point S10.8831
Daily Pivot Point S20.8809
Daily Pivot Point S30.8765
Daily Pivot Point R10.8897
Daily Pivot Point R20.8941
Daily Pivot Point R30.8963

Author

Haresh Menghani

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

More from Haresh Menghani
Share:

Editor's Picks

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Week ahead: Stocks seek direction as earnings take centre stage
It has been a challenging week for investors as the hotter US CPI report and the solid start to the earnings season did not produce the expected market movements. With the exception of the aussie, the US dollar is currently posting minimal gains across the FX spectrum, with its post-CPI rally proving short-lived, especially as dovish Fedspeak persists.
CFTC report: Euro and Aussie shorts build as Gold exposure remains elevated
The week in one sentence: Euro shorts deepened, and Yen longs retreated in the week to October 13. In addition, Coffee buying continued, and Gold exposure remained elevated despite another price decline. Speculators turned more bearish on the Euro (EUR), taking net shorts to around 137.6K contracts, the highest level since January 2016.
Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff
Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.