URGENT UPDATE: The USD/CHF currency pair is experiencing significant pressure as the dollar struggles following the disappointing US CPI report released on Friday. Market sentiment is shifting, and the dollar’s position remains precarious ahead of critical meetings this week.
Just announced, US Treasury Secretary Bessent shared optimistic news regarding US-China trade talks taking place in Malaysia. Both nations appear to have reached a preliminary agreement, intensifying the risk-on sentiment that is currently weighing heavily on the greenback.
The anticipated Trump-Xi meeting set for Thursday, October 5, 2023, adds urgency to the situation, as both leaders are expected to confirm these positive developments. This could further impact the dollar, especially since it is already facing headwinds from the recent economic data.
With the market largely pricing in a 25 basis point rate cut from the Federal Reserve this Wednesday, the lack of new US data has left analysts questioning the dollar’s potential for recovery. As of now, there are no strong indicators suggesting a rally for the dollar amidst the current climate.
On the Swiss franc side, the Swiss National Bank (SNB) has maintained steady interest rates, with President Schlegel indicating that the threshold for further cuts is high. Despite slight improvements in inflation rates, the SNB’s goal of maintaining inflation below 2% remains a challenge.
As the market reacts, the USD/CHF has bounced around the crucial 0.7872 level, currently trading between 0.8073 and 0.7872. On the 4-hour chart, the price rejected a downward trendline and found support around 0.7940. Buyers are likely to continue targeting a break above the trendline at 0.7980, while sellers are poised to push for a drop below 0.7872.
Traders are advised to monitor these levels closely as market participants play the range until a breakout occurs. With the FOMC policy decision on Wednesday and the Trump-Xi meeting on Thursday, volatility is expected to increase.
As developments unfold, the implications for investors and traders are significant. The current risk sentiment and potential shifts in US-China relations are likely to shape market dynamics in the coming days. Stay tuned for further updates as this story progresses.
