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  • USD/CHF remained under some heavy selling pressure for the fourth straight session on Thursday.
  • A turnaround in the global risk sentiment benefitted the safe-haven CHF and exerted some pressure.
  • A sharp fall in the US bond yields capped the early USD uptick and did little to lend any support.
  • Bearish traders now await a sustained break below the 0.9400 mark before placing fresh bets.

The USD/CHF pair continued losing ground through the early European session and dropped to fresh three-month lows, around the 0.9400 mark in the last hour.

The pair prolonged this week’s bearish trajectory and remained under some heavy selling pressure for the fourth consecutive session on Thursday. The ongoing downfall to the lowest level since mid-March was sponsored by a sharp fall in the equity markets, which benefitted the Swiss franc’s safe-haven status.

The global risk sentiment took a turn for the worse after the Fed offered a bleak outlook for the US economy. The gloomy projections largely offset the recent optimism over a sharp economic recovery. The Fed also pledged to maintain the rate unchanged at near-zero levels through 2022 and reiterated to increase the holdings of treasury/MBS at least at the current pace.

The US central bank’s commitment to continue with extraordinary policy measures led to a fresh leg down in the US Treasury bond yields. This, in turn, kept a lid on the early US dollar uptick, rather prompted some selling at higher levels. A modest USD pullback further contributed to the USD/CHF pair’s heavily offered tone.

However, extremely oversold conditions on short-term charts helped limit deeper losses and assisted the pair to find some support near the 0.9400 mark. Hence, it will be prudent to wait for a sustained breakthrough the mentioned level before positioning for any further near-term depreciating move.

Moving ahead, market participants now look forward to the US macro data for a fresh impetus. Thursday’s US economic docket features the release of Producer Price Index (PPI) and Initial Weekly Jobless Claims, which might produce some short-term trading opportunities later during the early North American session.

Technical levels to watch

 

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