The USD/CHF pair faced selling pressure for a third consecutive day on Thursday, dropping to its lowest level since March 13, around the 0.8760 region during the Asian session. This decline reinforces the previous day’s breakdown below the 0.8800 level, driven by the post-Federal Open Market Committee (FOMC) selling bias of the US Dollar (USD).
The Federal Reserve (Fed) recently opted to maintain its benchmark interest rate within the 5.25%-5.50% range, acknowledging progress in inflation control and a cooling labor market. Fed Chair Jerome Powell, in his post-meeting press conference, hinted at the possibility of an early rate cut if inflation continues to meet expectations. This outlook has pushed US Treasury bond yields to multi-month lows, leaving USD bulls on the defensive near a three-week low and adding pressure on the USD/CHF pair.
Simultaneously, the Swiss Franc (CHF) has gained some haven appeal due to rising geopolitical risks in the Middle East. However, the potential for the Fed to start easing policy soon has spurred a rally in equity markets, which could limit any significant appreciation for the CHF and contain the USD/CHF pair’s decline. Despite this, the prevailing fundamentals favor bearish traders, suggesting a downward trend for the spot prices.
Investors are now focused on the upcoming US Nonfarm Payrolls (NFP) report due on Friday, which is expected to influence market movements. Until then, the USD/CHF pair will likely be influenced by USD price dynamics and broader risk sentiment, given the absence of major economic data releases from the US on Thursday.
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