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USD/CHF plummets to fresh monthly lows, approaches 0.98 on dovish FOMC minutes

  • FOMC members voice their concerns over persistently low inflation.
  • US Dollar falls sharply toward the 93 mark.
  • 10-year US T-bond yield stumbles to fresh 2-week lows, down 2% on the day.

The USD/CHF extended its daily losses in the late NA session and touched its lowest level since October 20 at 0.9813. As of writing, the pair was trading a couple of pips above that level, losing nearly 100 pips, or 1%, on the day.

FOMC takes a cautious stance on further rate hikes

According to the minutes from the Federal Reserve’s monetary policy meeting in November, many participants felt an interest rate increase was warranted in the near term given the U.S. economy remained on track. However, the statement showed that there was a discussion about the possibility of the Fed undercutting inflation expectations by tightening the monetary policy while price rises were below its target. Moreover, a majority of the participants observed that the weak inflation could persist and may reflect a drop in inflation expectations.

Although markets continue to price a 91.5% probability of a December rate hike according to the CME Group FedWatch, today's statement suggests that further rate hikes next year are not imminent. At the moment, the US Dollar Index is at 93.14, down 0.8% on the day.

Technical levels to consider

With a decisive break below 0.9800 (psychological level), the pair could aim for 0.9760 (200-DMA) and 0.9700 (Oct. 15 low). On the upside, resistances align at 0.9855 (50-DMA), 0.9945 (Nov. 21 high) and 1.0000 (parity level).

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