- USD/CHF witnessed some fresh selling on Monday amid a broad-based USD weakness.
- The risk-on mood did little to impress bullish traders or extend any support to the pair.
- The downside seems limited as the focus now shifts to the latest FOMC policy decision.
The heavily offered tone surrounding the USD dragged the USD/CHF pair back closer to mid-0.8800s, or closer to multi-year lows touched on Friday.
The pair failed to capitalize on the previous session’s attempted recovery move, instead met with some fresh supply on the first day of a new week and was pressured by sustained US dollar selling bias. In fact, the USD Index dropped to a fresh two-and-half-year low amid firming expectations for additional US fiscal stimulus measures.
A bipartisan $908 billion COVID-19 package could reportedly be split into two to increase its chances of approval by both Democrats and Republicans. This comes amid worries about the economic fallout from the ever-increasing COVID-19 case and the imposition of new restrictions in several US states, which kept the USD bulls on the defensive.
Meanwhile, the prevalent risk-on mood, which tends to undermine the safe-haven Swiss franc, did little to impress bullish traders or lend any support to the USD/CHF pair. The global risk sentiment remained supported by optimism over the rollout of vaccines for the highly contagious coronavirus disease and hopes for a global economic recovery.
It will now be interesting to see if the USD/CHF pair is able to attract any buying at lower levels or prolongs its recent bearish trajectory amid absent relevant market moving economic releases. That said, investors might prefer to wait for this week’s FOMC monetary policy update before positioning for the pair’s near-term trajectory.
Technical levels to watch
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