- USD/CHF edged lower for the third successive day and dropped to a near three-week low on Friday.
- A modest USD weakness was seen as a key factor exerting some downward pressure on the major.
- The risk-on mood undermined the safe-haven CHF and limited losses amid the year-end thin liquidity.
The USD/CHF pair remained depressed through the first half of the European session and was last seen hovering near a three-week low, around the 0.9170-65 region.
The pair edged lower for the third successive day on Friday and prolonged this week's rejection slide from the 0.9250 resistance zone. The downtick was exclusively sponsored by a modest US dollar weakness, with bears now looking to extend the downward trajectory further below the very important 200-day SMA.
That said, a generally positive tone around the equity markets undermined the safe-haven Swiss franc and extended some support to the USD/CHF pair. The global risk sentiment remained well supported by the recent studies, indicating that Omicron infections are less likely to lead to hospitalization.
Apart from this, the Fed's hawkish outlook acted as a tailwind for the greenback and should further help limit any deeper losses for the USD/CHF pair, at least for now. It is worth recalling that the so-called dot plot indicated that the Fed could hike interest rates at least three times next year.
From a technical perspective, the ongoing slide dragged the USD/CHF pair below support marked by the lower end of a near three-week-old trading range. A subsequent fall below the 0.9160-55 support area will reaffirm the negative bias and pave the way for a further near-term depreciating move.
The divergence between the fundamental backdrop and the technical setup warrants some caution before placing aggressive directional bets. Moreover, the year-end thin liquidity conditions suggest that the USD/CHF pair is more likely to enter a consolidation phase and oscillate in a narrow band on the Christmas Eve.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.