USD/CHF plummets to fresh low since 2015 as USD downfall remains uninterrupted

The USD/CHF pair prolongs its downtrend for the sixth successive day on Thursday and drops to its lowest level since January 2015, around the 0.8620-0.8615 region during the early part of the European session.

The ongoing downfall is exclusively sponsored by the relentless selling around the US Dollar (USD), which sinks to a 15-month low in the wake of firming expectations that the Federal Reserve (Fed) will hike interest rates only one more time this year. The bets were lifted by softer US consumer inflation figures released on Wednesday, showing that the headline US CPI rose just 0.2% in June and the yearly rate slowed from 4% to 3% - marking the smallest rise since March 2021. Moreover, the monthly increase in core prices was the smallest since August 2021.

This comes on the back of signs that the US labor market is cooling and should allow the Fed to soften its hawkish stance, fueling speculations that the US central bank is close to ending its fastest monetary policy tightening cycle since the 1980s. This, in turn, lead to a further decline in the US Treasury bond yields, which is seen weighing on the Greenback and exerting heavy pressure on the USD/CHF pair. The steep decline, meanwhile, seems rather unaffected by the prevailing risk-on environment, which tends to undermine the safe-haven Swiss Franc (CHF).

With the latest leg down, spot prices have fallen nearly 400 pips from the 0.9000 psychological mark, or the monthly peak touched last week. This, along with the extremely oversold Relative Strength Index (RSI) on the daily chart, might prompt bearish traders to take some profits off the table and help limit any further losses for the USD/CHF pair, at least for the time being. Market participants now look to the US economic docket, featuring the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims for some meaningful impetus.

Technical levels to watch