- USD/CHF tumbles from 1-year highs signals more losses ahead.
- Swiss franc among biggest gainers on Monday.
The USD/CHF pair dropped sharply on Monday extending the reversal that started on Friday after being rejected from levels on top of 1.0000. Higher US yields and US data failed to offer support to the slide.
On Friday, USD/CHF peaked at 1.0069, the highest intraday level since May 2017. But it pulled back sharply and ended in negative territory. Today it extended the decline and bottomed during the US session at 0.9962. It was about to end the day around 0.9965/70, with a decline of 50 pips, the worst day since the beginning of the month.
On Tuesday, the US dollar could receive some support from Jerome Powell’s testimony at Congress. The event could have a limited impact considering that the report was already released but his words will be followed by market participants.
The reversal seen in USD/CHF weakened the outlook for the US dollar. Price is back into the previous range between 0.9990 and 0.9855. The negative tone prevails and a slide to the horizontal support at 0.9935 (also the 20-day moving average) seems likely. A break below the mentioned level could open the doors for a decline to 0.9905 and below 0.9855.
If the US dollar manages to rise back above 1.0000 it would remove the negative tone and the greenback could recover strength. A daily close on top of 1.0050 is needed to open the doors to more gains.