- Bulls failed to capitalize on last week’s strong up-move to three-week tops.
- Sliding US bond yields capped the USD and seemed to exert some pressure.
- Traders might remain cautious ahead of the highly anticipated FOMC meeting.
The USD/CHF pair eroded a major part of the Friday’s positive move to near three-week tops, albeit has managed to hold its neck above the 0.9900 handle.
The pair failed to capitalize on last week’s strong momentum, rather met with some fresh supply on the first day of a new trading week and seemed unaffected by the prevalent bullish sentiment surrounding the US Dollar.
The greenback stood tall near a two-month high and remained supported by Friday’s stronger than expected US Q2 GDP growth figures, which further reduced chances of any aggressive interest rate cut by the Fed.
However, a sharp pullback in the US Treasury bond yields kept a lid on any strong follow-through USD up-move and seemed to be the only factor exerting some downward pressure since the early European session.
Adding to this, nervousness ahead of this week’s key event risk – the highly anticipated FOMC meeting on July 30-31, further seemed to underpin the Swiss Franc’s safe-haven demand and collaborated to the weaker tone.
However, in absence of any major market moving US economic releases on Monday, investors are likely to refrain from placing any aggressive bets that shoudl help limit any deeper losses, at least for the time being.
Hence, it will be prudent to wait for a strong follow-through selling before confirming that the recent corrective bounce has already run out of the steam and positioning for any further near-term depreciating move.
Technical levels to watch
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