- USD/CHF eased from multi-month tops amid a modest USD pullback from three-week tops.
- Hawkish Fed expectations should act as a tailwind for the USD and help limit losses for the pair.
- The risk-on mood might undermine the safe-haven CHF and further lend support to the major.
The USD/CHF pair edged lower during the early European session and refreshed daily lows, around the 0.9260-55 region in the last hour, albeit lacked follow-through.
The pair witnessed a modest pullback from the highest level since April 9, around the 0.9280 region touched earlier this Friday and eroded a part of the previous day's strong gains. Following the overnight rally to three-week tops, the US dollar bulls opted to take some profits off the table. This was seen as a key factor that acted as a headwind for the USD/CHF pair.
That said, a combination of factors might continue to lend support and help limit any deeper losses for the USD/CHF pair. Thursday's upbeat US Retail Sales report now seem to have convinced investors that the Fed would eventually begin rolling back its massive pandemic-era stimulus sooner rather than later. This, in turn, should limit any meaningful USD corrective slide.
Apart from this, the prevalent risk-on mood could undermine demand for the safe-haven Swiss franc and extend some support to the USD/CHF pair. Moreover, a sustained break through the 0.9225-30 supply zone on Thursday favours bullish traders and supports prospects for additional gains. Hence, any subsequent decline might still be seen as a buying opportunity and remain limited.
Market participants now look forward to the release of the Prelim Michigan US Consumer Sentiment Index, due later during the early North American session. The data could influence the USD and provide some impetus to the USD/CHF pair. Traders might further take cues from the broader market risk sentiment and produce some opportunities around the major.
Technical levels to watch
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