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USD/CHF stays bearish around 0.8600 as Fed concerns weigh on US Dollar ahead of US GDP

  • USD/CHF remains pressured for the third consecutive day while declining toward multi-year low marked the last week.
  • US Dollar weakness fades amid cautious mood ahead of ECB, US GDP.
  • Fed announces 0.25% increase in interest rates but markets expect its to be the last.
  • Swiss Franc pair’s recovery remains elusive as US statistics fail to underpin September rate hike concerns.

USD/CHF bears jostle with the key support around 0.8580 as markets brace for the European Central Bank (ECB) monetary policy decision during early Thursday, making rounds to 0.8600 round figure by the press time.

Even so, the Swiss Franc (CHF) pair stays bearish for the third consecutive day amid the broad US Dollar weakness, as well as due to the market’s cautious optimism. That said, the US Dollar Index (DXY) prints a three-day downtrend despite the Federal Reserve’s (Fed) 0.25% interest rate hike, as well as readiness for an interest rate increase in September, amid fears of a sooner end to the tightening spell. Also likely to have weighed on the greenback could be expectations of witnessing further easing in the US data, which in turn will challenge the Fed from lifting the rates in September.

It’s worth observing that the US stock futures regain upside momentum targeting the yearly high marked the previous day while equities in the Asia-Pacific zone also edge higher as market participants sense a sooner end to the rate hike trajectory at the major central banks. Additionally, improvements in China data and the International Monetary Fund’s (IMF) rejection of the recession woes also underpin the market’s mildly positive outlook.

It should be noted that the Swiss National Bank (SNB) appears more hawkish compared to the Fed and hence exert downside pressure on the USD/CHF prices.

Looking ahead, the first readings of the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2), expected to ease to 1.8% from 2.0%, will be important to watch for clear directions. Also crucial will be the US Durable Goods Orders for June, likely easing to 1.0% from 1.8% prior (revised), as well as the monetary policy announcements from the European Central Bank (ECB).

Technical analysis

A seven-week-old rising support line, around 0.8580 by the press time, challenges USD/CHF bears from refreshing the lowest level since 2015 by breaking the 0.8555 mark. That said, the nearly oversold RSI also prods the Swiss Franc (CHF) buyers. However, a corrective bounce remains elusive unless crossing May’s bottom of 0.8820.

 

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