USD/CHF erases daily gains on post-FOMC USD sell-off
The USD/CHF pair quickly moved off daily highs after the greenback came under a heavy selling pressure following the FOMC press release and gave back almost all of its daily earnings. As of writing, the pair is trading at 0.9530, up only a couple of pips on the day.
After recovering to the 94 mark on Wednesday, the US Dollar Index quickly lost its footing and slumped to mid-93s as investors couldn't find what they have been looking for in the FOMC statement. At the moment, the index is at 93.55, losing 0.4% on the day.
Although the statement revealed that the Committee didn't change anything regarding their views on inflation, employment, and the overall outlook of the economy, it failed to provide clarity on the balance sheet normalization program. Commenting on today's FOMC statement, Brown Brothers Harriman analysts said, "with little new information in the FOMC statement and no surprises, the passing of the meeting allowed the market to do what it was doing before the calm around the FOMC meeting."
Technical outlook
Despite this last drop, the pair could still be looking to extend its gains if it closes the day above the 0.95 handle. Especially if the risk-on mood, which has been weighing on the safe-haven CHF since Monday, persists. On the upside, 0.9600 (psychological level) could be seen as the first technical hurdle ahead of 0.9660 (Jul. 17 high) and 0.9700 (psychological level/Jul. 14 high). On the downside, supports align at 0.9500 (psychological level), 0.9440 (May 3, 2016, low) and 0.9400 (psychological level).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
