The US Dollar came under some selling pressure in the past hour, with the USD/CHF pair reversing early tepid gains and drifting into negative territory.
Currently trading around 1.0050 region, testing weekly lows, lack of greenback buying interest has been the key factor weighing on the major. Investors seemed to adjust their positions ahead of influential central bank monetary policy meetings, ECB and FOMC.
ECB will announce its monetary policy decision later during European session and is widely expected to announce an extension of six month for its EUR 80b a month asset purchase program, which is scheduled to end in March. However, ECB inaction and (or) signal towards a possible tapering would highly disappoint market participants and might trigger a fresh bout of volatility in the FX markets, eventually provide some impetus for the Swiss Franc's safe-haven demand.
Moreover, disappointment from ECB could lead to a broad based US Dollar weakness and would attract fresh selling pressure around the USD/CHF major, thus increasing its vulnerability to extend the weakness further in the near-term.
Technical levels to watch
On a sustained weakness below 1.0050 level is likely to accelerate the slide towards 1.0015 intermediate support before the pair heads towards retesting parity mark. On the upside, 1.0080 level (session peak) now seems to act as immediate resistance above which the pair is likely to aim back towards 1.0100 handle before rising further towards its next resistance near 1.0140 region.
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