USD/CHF drops to two-week lows, tests parity

• Modest USD weakness on Monday weighs on the pair.
• Wall Street looks to open the day flat.

The USD/CHF pair, which lost more than 50 pips last week, extended its slide on Monday and tested the critical parity mark for the first time since early March. At the moment, the pair is down 0.1% on a daily basis at 1.0007.

In the absence of significant macroeconomic data releases today, the bearish pressure on the USD remained intact on Monday and allowed the pair to push lower with the US Dollar Index slumping to its lowest level in two weeks at 96.38. Ahead of the NAHB Housing Market Index, which is unlikely to trigger a meaningful market reaction, the DXY is losing 0.06% on the day at 96.45.

The next significant driver for the greenback will be this Wednesday’s FOMC statement, which will include the updated dot plot. Previewing the event, “We expect Fed to lower its ‘dot’ signal further to just one rate hike in 2019 (down from two). We expect them to be revised lower also for 2020 and 2021 and we will not be surprised if the Fed signals one and done,” Danske Bank analysts argued.  

In the next hour, markets will be paying attention to Wall Street’s opening to see if the risk perception can be a catalyst. Nonetheless, the S&P 500 Futures is up only 0.08% on the day, suggesting that stocks are likely to stay quiet on Monday.

Key technical levels