- Dismal US data prompts some USD weakness and exert fresh pressure.
- The downside remains cushioned ahead of Wednesday’s FOMC decision.
The USD/CHF pair refreshed daily lows, around the 0.9965 region in reaction to dismal US regional manufacturing index, albeit quickly recovered few pips thereafter.
The US Dollar failed to capitalize on Friday’s mostly upbeat US retail sales data-led recovery move and remained depressed on the first day of a new trading week, which was seen as one of the key factors that kept a lid on the pair’s initial uptick to two-week tops.
The greenback lost some additional ground amid an intraday turnaround in the US Treasury bond yields following the latest disappointment from the Empire State Manufacturing Index, which collapsed to -8.6 in June and marked its lowest level since Oct. 2016.
Adding to this, persistent worries over a further escalation in trade tensions between the world’s two largest economies and heightened geopolitical risks in the Middle East further benefitted the Swiss Franc’s relative safe-haven status and collaborated to the intraday slide.
The downside, however, remained cushioned, at least for the time being, as investors now seemed reluctant to place any aggressive bets ahead of the next big event risk – the highly anticipated FOMC monetary policy update, scheduled to be announced on Wednesday.
The US central bank is widely expected to leave interest rates unchanged and hence, the key focus will be on the updated economic/interest rate projections, which should play an important role in determining the pair’s next leg of a directional move.
Technical levels to watch