- USD/CHF trading is weak in a quiet session as the US dollar feelings deteriorate early on the FOMC and in the middle of the TWD spillover pressure throughout Asian FX.
- US economic data remains stable, but Switzerland's soft inflation and SNB's dark bias are rising market expectations for negative rates.
- The technical ones point to the ongoing downside for the USD/CHF, with the support seen below 0.9050 and leaning signals.
USD/CHF was under pressure on Tuesday, with a pair slipping amid continued tenderness in the wider US (USD) dollar. The pair traded to the lower band of its recent coverage as global markets weigh the implications of the extraordinary transfer of the Taiwan dollar (TWD) of Monday and its potential collapse into Asian currencies. Although TWD has pared some acquisitions following the central bank intervention, concerns about greater FX transfers continue to push careful positioning.
The US dollars The index (DXY) trades near 99.74, which goes to the second straight day of losses. Markets are awaiting the outcome of the Federal Reserve's two-day policy meeting, which began on Tuesday. There are no changes in the rates expected, and no updated forecasts will be released until the June 17-18 meeting. However, the tone from Fed chair Jerome Powell is closely evaluated as markets are looking for guidance on the timing and greatness of potential rates. Recent data – especially April PMI's ISM services at 51.6 and solid Nonfarm Payrolls at 177,000 – most root that the fed can afford to wait, even if the q2 GDP Outlook remains mixed -Halong, with models showing growth between 1.1% and 2.3%.
In Switzerland, Franc (CHF) continues to attract safe demanding, but its strong performance and a flat inflation print in April complicated the Swiss National Bank (SNB) stance. The Swiss CPI came in unchanged years-on year, with the main inflation falling 0.6% from 0.9%. It has announced speculation that SNB can deliver an additional cutting rate at the June 19 meeting, which potentially push the policy back to negative territory. Continuing rates in the market now reflect around 40 basis for easing points in the next quarter. SNB remains concerned about deflection risks and maintains FX intervention on the table as a policy option.
Geopolitical tensions in Europe and the Middle East also adopt demand for safe shelters. German's Friedrich Merz was elected Parliament's Chancellor in a second voting cycle after the first vote disappeared, and the ongoing conflicts in Ukraine and Gaza continued to increase risk flows.
Technical analysis
Technically, the USD/CHF remains under the sale of pressure. Although a whole technical deterioration is not provided with this input, existing trends show the pair is bias on the downside, with a 0.9100-0.9050 zone acting as a basic support band. If this range is damaged, the next potential level to watch is 0.9000. Upside down, the resistance is expected near 0.9150 and 0.9185, which aligns with recent peaks of integration. Momentum indicators are wide bearish, with trend signals suggesting additional tenderness unless the FOMC has triggered a transfer of dollar emotion.
With the SNB rate rising rate rising and the Fed is not likely to deliver a Hawkish surprise, the path of at least resistance for the USD/CHF will appear lower in the near term.
Sunny chart
