- USD/CHF pulls away from multi-week highs amid mild USD pullback.
- Less aggressive statements from Fed officials and lower US bond yields weigh on the dollar.
- The decline appears supported as investors await US macroeconomic data for further momentum.
The pair USD/CHF extends pullback the previous day from the 0.9885 region, or a multi-week high, and sees some continuation selling on Friday. The steady decline extends throughout the European session and drag the pair down to the 0.9800 level.
The US dollar consolidated below two-decade highs hit on Thursday, which in turn was seen as a key factor putting downward pressure on the USD/CHF pair. Two of the Federal Reserve’s monetary policy makers declared Thursday supporters of a new rate hike of 75 basis points later this month, rather than an even bigger move, as markets had anticipated, leading to dollar profit-taking.
In fact, investors raised their expectations for a large-scale Fed rate hike of 100 basis points after data released on Wednesday showed US consumer inflation accelerated in June to a four-decade high. However, the less aggressive statements of the Fed Governor, Christopher Waller and St. Louis Fed President Jim Bullard forced investors to lower their expectations of a more aggressive tightening of monetary policy.
Apart of this, a further decline in US Treasury yields was seen as another factor keeping dollar bulls on the defensive. However, the decline remains moderate as investors preferred to wait on the sidelines ahead of today’s key US macroeconomic releases. Monthly retail sales data, the Empire State Manufacturing Index, industrial production data and the Michigan Consumer Sentiment Index will be released on Friday.
Therefore, it will be prudent to wait for a strong continuation of selling before confirming that the recent strong rebound from levels below 0.9500 is over. Nonetheless, the USD/CHF pair remains on track to finish positive for the third week in a row, although it would need to find acceptance above the 0.9855-0.9860 area before investors start to position themselves for additional gains.
USD/CHF technical levels
Source: Fx Street
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