USD/CHF experiences slight losses due to a softer USD, but lacks momentum amid a prevailing risk-on sentiment
FUNDAMENTAL OVERVIEW:
- USD/CHF slips on Friday, ending a two-day winning streak from the weekly high.
- Dovish Fed expectations and declining US bond yields pressure the USD, contributing to the pair’s decline.
- However, the risk-on sentiment may weaken the safe-haven appeal of the CHF, potentially limiting further losses.
The USD/CHF pair struggles to build on its strong gains from the past two days, trading with a slight negative bias during the Asian session on Friday. Spot prices hover around the 0.8660-0.8655 range due to a modest decline in the US Dollar (USD), despite a lack of strong selling pressure or bearish conviction.
Increased expectations for a 50 basis points interest rate cut by the Federal Reserve (Fed) in September have led to a fresh decline in US Treasury bond yields. This also pulls the USD Index (DXY), which measures the Greenback against a basket of currencies, away from its weekly high reached on Thursday, weighing on the USD/CHF pair. However, the prevailing risk-on sentiment dampens demand for the safe-haven Swiss Franc (CHF), supporting spot prices.
With no significant economic data released on Friday, the mixed fundamental backdrop suggests caution before anticipating any substantial intraday decline. Market participants are now focusing on the upcoming US consumer inflation figures, released next Wednesday. This crucial data will be pivotal in shaping the Federal Reserve’s future policy decisions, which should, in turn, provide meaningful direction for the USD and the USD/CHF pair.
USD/CHF TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CHF is trading within a down channel.
USD/CHF is moving above 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 0.8670
Immediate support level: 0.8613
HOW TO TRADE USD/CHF
After a significant decline, USD/CHF found support and has initiated a strong upward trend. The pair has successfully pierced through its recent resistance level, suggesting potential for additional price appreciation.