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USD/CHF stays below 0.9600 as US dollar keeps the red

  • USD/CHF remains on the back foot near 17-month low.
  • Expectations of the Fed’s rate cut, coronavirus outbreak in the US weigh on the USD.
  • Swiss GDP, G7 conference will be crucial to watch.

USD/CHF declines to 0.9585 during the initial trading hours on Tuesday. The pair keeps the bearish momentum intact amid the broad US dollar weakness. Traders will now focus on Swiss GDP and calls of globally coordinated measures to counter coronavirus (COVID-19) measures for fresh impulse.

The US dollar index stays under pressure around the seven-week lows, flashed Monday, as speculations surge that the US Federal Reserve will announce a 0.25% rate cut in its March meeting to ward off the economic impact of the COVID-19.

In addition to the CME’s gauge indicating nearly certain odds of the Fed’s rate cut, US President Donald Trump’s repeated pushes to the US central bank could also play their parts in forcing the Fed policymakers to negate their earlier bullish bias.

The coronavirus has been spreading widely into the UK, the US and Europe off-late. The fourth death in the US, as well as emergency in Redmond, occupied the latest headlines. However, the trade sentiment remains mostly positive on expectations of easy money. While portraying the same, the US 10-year treasury yields remain positive around 1.126% whereas S&P 500 Futures and most Asian shares register mild profits by the press time.

Looking forward, Switzerland’s fourth quarter (Q4) GDP, expected 1.3% YoY versus 1.1%, is likely an immediate catalyst for the pair.

Though, the major attention will be given to the details of the G7 policymakers’ conference call. The virtual meeting at 12:00 GMT will be led by the US Treasury Secretary Steve Mnuchin and Fed Chair Jerome Powell. The global leaders are likely to announce measures to tame the negative impacts of coronavirus.

Technical Analysis

Following a heavy downpour during the last few days, the bears are likely to wait for a daily closing below September 2018 low near 0.9540 while targeting 0.9500 during the further declines. However, the pair’s recovery moves past-0.9630, including lows marked on January 31, can recall the buyers targeting 0.9700 mark.

 

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