- The USD / CHF is negotiated near a critical support zone while the US dollar index (DXY) opposite the course before the US-Chinese trade discussions in Switzerland this weekend.
- Fed officials have highlighted the risks of stagflation, noting the potential for increasing inflation and unemployment if the prices remain high.
- Technically, the DXY faces an immediate support at 100,2200 and resistance at 101.9000, while the USD / CHF could test its recent stockings if the dollar is more weakening.
The USD / CHF pair sails in a critical stadium because it is negotiated near a key level of support, with a wider feeling of the market darkened by the uncertainties of commercial conversation. The US dollar index (DXY), which follows the USD against a basket of six large currencies, recently fell to 100.3,000 after reaching a summit close to 100,8600. This reversal comes as the markets digest the implications of American-Chinese trade discussions which take place for this weekend in Switzerland, as well as concerns about a Dull Trade Agreement in the United Kingdom which has failed to suppress key rates. Despite the hopes of a breakthrough, the American position seems lower, President Trump suggesting that the prices could be reduced by 50% if China cooperates, although it remains very uncertain.
From a fundamental point of view, the Fed remains cautious about economic prospects. FED officials, including the president of the New York Fed, John Williams, stressed the need for price stability, while Governor Adriana Kugler noted that the current policy position is “moderately restrictive”, alluding to what rates can remain high despite the slowdown in growth. In addition, the Atlanta Fed recently revised its GDPNOW Q2 model at 2.3% of Saar, reflecting a solid prospect of growth, although the risk of stagflation remains that the prices continue to disturb the world supply chains.
Technical analysis
Technically, the Dxy tests the support at 100,2200, an old level of resistance which could act as a base if the lowering feeling persists. Below, the following support is 97,7300, with deeper levels at 96,9400, 95,2500 and 94,5600 if the downward pressure is intensifying. Uplining, the resistance is observed at 101.9000, followed by the 55 -day SMA at 102,4700. For the USD / CHF, a break below the recent support could open the door to new multi -year hollows, with potential targets around 0.8900 and 0.8800 if the wider feeling of the USD remains low.
Daily graphic
