- Flight-to-safety boosts demand for CHF.
- USD/CHF loses more than 50 pips on Monday.
- US Dollar Index erases a large portion of Friday’s gains.
Although the USD/CHF pair was able to quickly recover its bearish opening gap in the early Asian session, the risk-off mood allowed the CHF to gather strength against its peers on Monday. After slumping to a fresh session low of 0.9918, the pair staged a small rebound and was last seen trading at 0.9230, still down 52 pips, or 0.5%, on a daily basis.
The uncertainty surrounding Brexit deal and ongoing political drama in France and Italy alongside with concerns over a global economic slowdown continue to push investors toward safe-havens such as the CHF and the JPY.
On the other hand, the greenback is struggling to preserve its strength ahead of this Wednesday’s critical FOMC meeting, at which the Fed is expected to announce a 25 bps rate hike. Earlier in the session, the data published by the Federal Reserve Bank of New York showed that the business activity in the regional manufacturing sector expanded at a slower-than-expected rate in December with the headline Business Conditions Index slumping to 10.9 from 23.3 in November. At the moment, the US Dollar Index is down 0.25% on the day at 97.18.
Technical levels to consider
The pair could face the first technical resistance at 0.9950 (20-DMA) ahead of 1.0000 (psychological level) and 1.0065 (Nov. 5 high). On the downside, supports are located at 0.9910 (200-DMA), 0.9875 (100-DMA) and 0.9860 (Dec. 11 low).
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