USD/CHF’s reversal from 0.9365 extends below 0.9300

• The US dollar retreats for the second consecutive day and reaches levels sub-0.9300.
• The Swiss franc regains lost ground amid a somewhat softer dollar.
• USD/CHF: Expected to remain capped below 0.9330 – Credit Suisse.

The US dollar is pulling back against the Swiss Franc for the second consecutive day after having peaked at nearly six-month highs at 0.9365. The pair has returned below 0.9300 although it is still set for a 0.6% advance this week.

The CHF bounces up against a softer dollar

The Swiss franc is regaining lost ground for the second consecutive day, with the US dollar retreating across the board. The US Dollar Index, which measures the value of the dollar against its most traded currencies is losing against 0.3% on the day, returning to levels around 94.00 after having hit one-year highs at 94.50 area earlier this week.

US T-Bond yields, which have fueled the recent dollar rally, are ticking down on Friday, with the 10-year benchmark back below 1.5% for the first time since Monday. Beyond that, the parliamentary gridlock to lift the US debt limit and avoid a government shutdown is adding negative pressure on the dollar.

The positive macroeconomic docket, with the ISM Manufacturing PMI showing US factory activity expanded beyond expectations in September and August’s personal consumption data, posting a 0.8% rise, against market consensus of a 0.6% reading, have failed to offer support to the US dollar.

USD/CHF: Expected to remain capped at 0.9330 area – Commerzbank

According to Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, the USD/CHF might have hit a relevant resistance level, at 0.9330: “USD/CHF remains bid near term but will shortly encounter the 2019-2020 downtrend at 0.9330 and recent high at 0.9333, where ideally it will again fail (…) “The market will have to head below the 55-day ma at 0.9174 to alleviate immediate upside pressure.” 

Technical levels to watch