- USD/CHF edged lower for the third straight day on Tuesday and dropped to one-week lows.
- A softer risk tone benefitted the safe-haven CHF and exerted some pressure on the major.
- A modest USD strength might hold traders from placing bearish bets and help limit losses.
The USD/CHF pair edged lower through the mid-European session and dropped to one-week lows, around the 0.8960 region in the last hour.
The pair witnessed some selling on Tuesday and extended its recent pullback from levels just above mid-0.9000s, or three-week tops touched last Friday. This marked the third day of a downtick and was sponsored by the prevalent cautious mood, which tends to benefit the safe-haven Swiss franc. That said, a modest US dollar strength might help limit the downside for the USD/CHF pair.
A softer US NFP print tempered expectations that the Fed would begin tapering its bond purchases. However, concerns about rising inflationary pressure acted as a tailwind for the greenback. Meanwhile, the supporting factor, to a larger extent, was offset by the ongoing decline in the US Treasury bond yields, which capped the upside for the USD and failed to impress the USD/CHF bulls.
Market participants now look forward to a relatively thin US economic docket, featuring the release of Trade Balance figures and JOLTS Job Openings later during the early North American session. This, along with the US bond yields, might influence the USD price dynamics. Apart from this, the broader market risk sentiment might produce some trading opportunities around the USD/CHF pair.
Investors, however, are likely to refrain from placing any aggressive directional bets, rather prefer to wait on the sidelines ahead of Thursday's release of the US consumer inflation figures. This will be another piece of important macro data that would set the tone for the FOMC meeting on June 15-16 and assist traders to determine the near-term trajectory for the USD/CHF pair.
Technical levels to watch
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