The USD/CHF pair encounters fresh selling after a temporary increase to the 0.8655 region and enters negative territory for the second consecutive day on Wednesday.
The spot prices reach a new weekly low during the early European session and are currently hovering around the 0.8620 area, experiencing a decline of approximately 0.20% for the day.
The US Dollar (USD) continues its decline for the second day in a row, following a modest pullback from a two-week high, putting downward pressure on the USD/CHF pair.
The slide in the USD is attributed to traders repositioning ahead of the crucial FOMC decision, but it is expected to be limited as they await further signals regarding the short-term policy outlook.
Markets have largely discounted the likelihood of any additional rate hikes this year after the anticipated 25 bps increase expected later on Wednesday. Nevertheless, investors remain cautious about whether the Federal Reserve (Fed) will adopt a more dovish stance, considering the remarkably resilient US economy.
Tuesday’s positive US Consumer Confidence Index has raised optimism that the economy might avoid a recession this year.
As a result, investors eagerly await the monetary policy statement and remarks from Fed Chair Jerome Powell during the post-meeting press conference for any clues about future rate-hike plans.
These events will significantly impact the USD’s performance and provide fresh direction to the USD/CHF pair. In the meantime, a positive risk sentiment in the market could weaken the safe-haven Swiss Franc (CHF) and offer support to spot prices.
Investors are also pleased with China’s commitment to bolster its fragile economy, contributing to the bullish sentiment in global equity markets. China’s focus on expanding domestic demand, boosting confidence, and mitigating risks has been highlighted by the state news agency Xinhua, citing the top decision-making body, the Politburo, of the ruling Communist Party.
Given this fundamental backdrop, the possibility of dip-buying at lower levels is likely, warranting caution for aggressive bearish traders.
However, confirmation that the USD/CHF pair has bottomed out near the 0.8560 region, or the lowest level since January 2015, will require a sustained move beyond the overnight swing low, around the 0.8700 mark, which remains to be seen.
___
Please continue to read new articles here about merchandise assessed by Waytrade.
