USD/CHF slides further below 0.9500 mark amid weaker USD, downside seems cushioned

USD/CHF witnessed a turnaround from the highest level since June 2020 touched on Wednesday.
The pullback was exclusively sponsored by modest USD retracement slide from the two-year peak.
Hawkish Fed expectations, elevated US bond yields should limit losses for the buck and the major.

Haresh Menghani FXStreet

The USD/CHF pair retreated further from the YTD high set earlier this Wednesday and slipped below the 0.9500 psychological mark during the first half of the European session.

Having touched its highest level since June 2020, the USD/CHF pair witnessed an intraday turnaround from the 0.9535 region and was pressured by modest US dollar pullback from the two-year peak. The USD downtick could be solely attributed to some profit-taking and is more likely to remain limited amid expectations for a more aggressive policy tightening by the Fed.

In fact, the markets seem convinced that the Fed would deliver multiple 50 bps rate hikes by the Fed to keep a lid on soaring inflation. The bets were reaffirmed by hawkish comments by influential FOMC members - St. Louis Fed President James Bullard, Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari - one of the more dovish policymakers.

This, along with concerns over rising inflationary pressures, pushed the yield on the benchmark 10-year US government bond to a level not seen since late 2018. The fundamental backdrop seems tilted firmly in favour of the USD bulls and supports prospects for the emergence of some dip-buying around the USD/CHF pair, warranting caution before positioning for deeper losses.

Market participants now look forward to the US economic docket, featuring the release of Existing Home Sales. This, along with the US bond yields, should influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment, which will drive demand for the safe-haven Swiss franc and provide some impetus to the USD/CHF pair.

Technical levels to watch

USD/CHF

Overview
Today last price	0.9493
Today Daily Change	-0.0030
Today Daily Change %	-0.32
Today daily open	0.9523

Trends
Daily SMA20	0.9332
Daily SMA50	0.9291
Daily SMA100	0.9246
Daily SMA200	0.9223

Levels
Previous Daily High	0.9523
Previous Daily Low	0.9434
Previous Weekly High	0.9443
Previous Weekly Low	0.9287
Previous Monthly High	0.946
Previous Monthly Low	0.915
Daily Fibonacci 38.2%	0.9489
Daily Fibonacci 61.8%	0.9468
Daily Pivot Point S1	0.9463
Daily Pivot Point S2	0.9404
Daily Pivot Point S3	0.9374
Daily Pivot Point R1	0.9553
Daily Pivot Point R2	0.9583
Daily Pivot Point R3	0.9643

Author

Haresh Menghani

FXStreet

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

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