- Political developments in the U.S. weigh on the greenback.
- Flight to safety boosts the demand for safe-havens.
- The pair’s losses this week exceeds 150 pips.
After closing 100 pips in the last two trading days of the week, the USD/CHF failed to make a meaningful recovery and extended its losses amid a renewed USD sell-off. At the moment, the pair is trading at 0.9814, losing 0.42% on the day.
The ongoing political crisis in the United States seems to be the primary reason behind the broad-based USD weakness on Wednesday. After Michael Cohen, US President Trump’s former lawyer, pleaded guilty to violating campaign finance laws with an aim to influence the presidential elections, Cohen’s lawyer told the press that his client had information regarding Russian involvement in the elections.
The US Dollar Index dropped below the 95 mark and touched its lowest level in 20-days 94.93. At the moment, the index is down 0.17% on the day at 95.05. Later in the day, the FOMC is going to publish the minutes of its August meeting.
“As we believe the Fed is on track to deliver two more hikes this year, we are more interested in any discussions on how long to continue shrinking the balance sheet and the future monetary framework,” Danske Bank analysts note.
Technical levels to consider
With a decisive break below 0.9800 (psychological level), the pair could extend its fall toward 0.9745 (Apr. 23 low) and 0.9670 (Apr. 19 low). On the upside, resistances are located at 0.9850 (daily high), 0.9935 (50-DMA) and 1.0000 (psychological level).
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