USD/CHF Approaches Multi-Day Low Below 0.90

USD/CHF faced selling pressure for the third consecutive day and hit a new multi-day low by breaking below the psychological level of 0.9000 during the Asian session on Friday. As the dollar continues to fall, bearish traders are now waiting for the price to break below the 100-day SMA to extend the recent decline since the one-month peak (early this week).

Weak US macro data showed signs of weakness in the labor market and the economy lost momentum at the end of the second quarter. This reaffirmed the market’s bets that the Federal Reserve (Fed) will start cutting interest rates in September and dragged the US dollar index (DXY), which tracks the US dollar against a basket of currencies, to a more than three-week low, becoming a key factor pressuring USD/CHF downward.

In addition, the adjustment of positions before the US non-farm data may also trigger further declines in the currency pair. The data will be released during the North American session on Friday. The non-farm data will determine the market’s expectations of the Fed’s future policies, which will in turn affect the demand for the US dollar and determine the short-term direction of USD/CHF.

Meanwhile, Switzerland’s June consumer price index (CPI) released on Thursday fell to 1.3% year-on-year, lower than the expected 1.4%. In addition, the core index fell to 1.1% year-on-year, compared with the expected 1.2%, which may allow the Swiss National Bank (SNB) to further ease policy. In addition, the SNB has expressed its readiness to intervene in the foreign exchange market, which will limit the appreciation of the Swiss franc and provide support for the USD/CHF pair.

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