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  • USD/CHF witnessed some follow-through selling for the second straight session on Friday.
  • Dovish Fed expectations, sliding US bond yields undermined the USD and exerted pressure.
  • Investors look forward to the US Retail Sales figures for some meaningful trading impetus.

The intraday USD selling picked up pace during the early European session and dragged the USD/CHF pair to three-day lows, around the 0.9020 region in the last hour.

The pair faced rejection near the very important 200-day SMA on Thursday and stalled this week’s goodish rebound from sub-0.9000 levels, or two-and-half-month lows. The overnight pullback from the vicinity of the 0.9300 mark extended through the first half of the trading action on Friday amid the emergence of some fresh selling around the US dollar.

Despite evidence of rising inflation in the US, a slew of Fed officials reiterated that price pressures from the reopening of the economy would prove transitory. Investors now seem convinced that the incoming positive economic data is unlikely to prompt an immediate shift in the Fed’s stubbornly dovish stance, which acted as a headwind for the greenback.

The Fed Vice Chair Richard Clarida said on Wednesday that weak job growth and strong inflation in April had not changed the central bank’s plan to maintain a loose monetary policy. Adding to this, the Fed Governor Christopher Waller said on Thursday that the Fed would not raise rates until it sees inflation above target for a long time or excessively high inflation.

Dovish Fed expectations dragged the US Treasury bond yields lower, which was seen as another factor that exerted some additional downward pressure on the USD. Even a generally positive tone around the equity markets, which tends to dent demand for the safe-haven Swiss franc, also did little to impress bulls or lend any support to the USD/CHF pair.

The market attention now turns to the release of US monthly Retail Sales figures, due later during the early North American session. The data will be closely scrutinized for guidance on whether the upward pressure on prices will persist. This might influence the Fed rate expectations, which, along with the US bond yields, will drive the USD in the near term.

Apart from this, the broader market risk sentiment will also be looked upon to grab some short-term trading opportunities around the USD/CHF pair.

Technical levels to watch

 

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