USD/CHF whipsaws, testing near-term lows and highs before settling into the midrange at 0.8840

The USD/CHF tested territory on both the low and high sides before settling into the midrange near 0.8840 on Wednesday, with markets testing the boundaries of risk sentiment after mixed US data chewed into risk appetite.

The US Dollar (USD) dipped into the week's familiar low point near 0.8820 as the Swiss Franc (CHF) continues to see ongoing strength on the back of Swiss National Bank (SNB) Franc repatriation. The pair also set a new high for the trading week just shy of 0.8880, but a recovery in market sentiment is sending the USD/CHF right back into the day's opening bids.

The SNB's historic build-up of foreign currency reserves peaked back in 2022 at a massive CHF 950 billion, and the Swiss central bank has been steadily selling off their foreign currency holdings, with the SNB's balance sheet of non-domestic currency reaching a seven-year low of CHF 657 billion as of October.

Despite Switzerland's desire for a softer Franc to help boost domestic production and exporters, the SNB's portfolio drawdown has seen the CHF appreciate notably against the USD, gaining nearly 13% from last November's USD/CHF peak of 1.0144.

Market risk appetite gets hung up on mixed US figures

US Initial Jobless Claims came in much better than expected, dipping to a five-week low at 209K against the market forecast of 225K for the week ending November 17th.

US Treasuries saw a brief spike in yields with the 10-year T-note yield tapping 4.445% before easing back on recovering investor risk appetite.

Investors were briefly driven back after the University of Michigan's (UoM) 5-year Consumer Inflation Expectations showed US consumers remain afraid of elevated inflation. the UoM inflation outlook sees inflation remaining at 3.2% on a 5-year time horizon, which will do little to encourage the Federal Reserve (Fed) into cutting interest rates sooner rather than later.

US markets are set to go dark on Thursday in observation of the Thanksgiving holiday, giving traders a breather before Friday's US Purchasing Managers' Index (PMI) figures.

The US S&P Global Composite PMI for November last came in at 50.7, and both the Services and Manufacturing components are expected to decline slightly. The Services component is expected to slip from 50.0 to a contractionary 49.8, with Manufacturing expected to tick down from 50.6 to 50.4.

USD/CHF Technical Outlook

Wednesday's tit-for-tat chart action sees the USD/CHF treading water near multi-month lows, testing bids last seen back in August.

The pair has so far been unable to make a successful bullish bid into the high side of the 200-day Simple Moving Average (SMA), near the 0.9000 handle.

The near-term technical floor will be at late August's last swing into 0.8750, while Greenback bidders will be looking to get the USD/CHF pushed back above major moving averages before the 50-day SMA can rotate into a bearish cross of the 200-day SMA.

USD/CHF Daily Chart