USD/CHF retreats sharply from 0.9700 toward 0.9600
- US dollar loses momentum during the American session, erases most of its daily gains.
- Swiss franc testing multi-year highs versus euro, SNB intervention likely taking place.
The USD/CHF pair topped at 0.9700 earlier on Wednesday before trimming gains during the American session. A retreat of the US dollar across the board sent the pair back to the downside. It found support at 0.9620 and as of writing, it is trading at 0.9635/40, 35 pips above yesterday’s close.
Price action was driven on Wednesday by the US dollar. The greenback bottomed on Asian hours and then bounced sharply, amid risk aversion and despite lower US yields. As equity indexes in Wall Street moved of lows, the greenback pulled back.
US economic data came in much worse than expected and according to the Beige Book “all districts reported highly uncertain outlooks among business contacts”. Markets ignored the reports.
In the US, business leaders asked President Trump to increase coronavirus testing dramatically before reopening the economy. In Germany, Chancellor Merkel announced the economy will start reopening on Monday.
SNB looking at CHF
EUR/CHF is trading at 1.0520/25, about to post the lowest daily close since July 2016. The pair continues to move south at a slow pace. The decline could be reflecting the demand for protection in Europe.
Last week, the Swiss National Bank revealed that the amount of cash commercial banks hold at the central bank hit a record, suggesting large intervention. With EUR/CHF moving toward 1.0500, more action from the SNB seems likely.
USD/CHF Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
