Search ForexCrunch
  • Fed rate cut bets held the USD bulls on the defensive and seemed to cap the upside.  
  • The prevailing risk-on mood dents CHF’s safe-haven status and remained supportive.
  • Traders refrained from placing fresh bets amid thin liquidity and ahead of Friday’s NFP.

The USD/CHF pair extended its sideways consolidative price action on Thursday and remained confined in a narrow trading band, just above mid-0.9800s.

A combination of diverging forces failed to provide any meaningful impetus or assist the pair to build its strong up-move posted at the beginning of this week and led to a subdued action through the mid-European session on Thursday.

The US Treasury bond yields  tumbled to more than 2-1/2 year lows amid expectations that the Fed will eventually move to cut interest rates in July, which kept the US Dollar bulls on the defensive and turned out to be one of the key factors capping gains.  

The downside, however, remained cushioned in the wake of the prevailing risk-on mood, which tends to undermine the Swiss Franc’s safe-haven demand, though was partly offset by slightly higher-than-expected Swiss consumer inflation figures.

In fact, the headline CPI remained flat on a month-on-month basis in June and the yearly rate also held steady at 0.6% – as compared to consensus estimates pointing to readings of -0.1% and 0.5% respectively, but did little to inspire traders.

Meanwhile, relatively thin liquidity conditions on the back of the Independence Day holiday in the US seemed to have held investors from placing any aggressive bets ahead of Friday’s important release of the closely watched US monthly jobs report (NFP).

Hence, it would be prudent to wait for a sustained move in either direction before traders start positioning for the pair’s next leg of a directional move, either towards surpassing the 0.9900 handle or falling back to test sub-0.9800 level.

Technical levels to watch