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  • USD/CHF remained under some heavy selling pressure for the third straight session.
  • Sliding US bond yields further dented the already weaker sentiment around the USD.
  • The ongoing downfall seemed rather unaffected by the upbeat mood around equities.
  • Investors now look forward to US CPI report for some impetus ahead of FOMC decision.

The USD/CHF pair continued losing ground through the early European session on Wednesday and dropped to near three-month lows, around mid-0.9400s in the last hour.

The pair prolonged this week’s bearish trend and remained under some heavy selling pressure for the third consecutive session on Wednesday. The downfall was sponsored by a broad-based US dollar weakness and seemed rather unaffected by a positive tone around the equity markets, which tend to undermine the Swiss franc’s safe-haven demand.

Investors now seemed to have started pricing in the possibility of a dovish outlook from the Fed. This, in turn, led to some follow-through slide in the US Treasury bond yields and continued exerting pressure on the greenback. In fact, the key USD Index to the lowest level since March 11, with bulls now eyeing the FOMC decision for some respite.

The Fed is scheduled to announce its monetary policy update later during the US trading session. The key focus, however, will be on the accompanying policy statement. This will be followed by the post-meeting press conference, where comments by the Fed Chair Jerome Powell will be closely scrutinized for clues about the future policy path.

Meanwhile, the global risk sentiment remained well supported by firming expectations that the worst of the coronavirus pandemic is over and growing hopes for a sharp V-shaped recovery for the global economy. The upbeat market mood was evident from a positive tone surrounding the global equity markets, albeit did little to impress bulls.

Heading into Wednesday’s key event risk, market participants will look forward to the release of the latest US consumer inflation figures. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch


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