The USD/CHF outlook remains negative despite a recent recovery attempt. The broad risk aversion may keep the gains limited.
As buyers embrace the dollar’s recovery ahead of Monday’s European session, demand for a fresh intraday high near 0.9340 is fueling the USD/CHF pair.
Despite geopolitical worries out of Ukraine and negative headlines from China and Saudi Arabia, the Swiss currency pair is posting a rebound, supporting the US dollar as a safe-haven asset. In addition, a recent hawkish statement by Fed officials is also encouraging for bulls of the US dollar. Neil Kashkari, Thomas Barkin, and Christopher Waller, the three presidents of the Federal Reserve Banks of Minneapolis, Richmond Fed, and the Federal Reserve Board, spoke Friday about inflation and the Fed’s next steps. Dollar bears, who fear dovish rate hikes in the future, were repelled by policymakers citing the Ukraine crisis as the reason for the latest rate hike.
Market sentiment has been impacted by record-high Coronavirus cases in China and Evergrande’s suspension of trading in Hong Kong, which has resulted in a recent boost to the USD/CHF pair. These games indicate that the one percentage point decline in the S&P 500 futures at press time has helped, while the drop in Japan is limiting the US Treasury Department’s activity in Asia.
US Dollar will be watched for the impact Jerome Powell’s recent words have had on the US dollar as the Fed Chair speaks. US dollar bears will return to the table if the policymakers hope inflation worries will ease again. Risk aversion may limit USD/CHF declines.
The USD/CHF price looks feeble, struggling with the 50-period SMA (4-hour chart). The 20-period SMA is also pointing downwards. We can see four widespread down bars with very high volume in the immediate background. It shows that the pair will likely find it too hard to recover.
Any upside recovery may stall at 0.9350 ahead of 0.9400. On the flip side, 0.9300 will be the immediate target for the bears ahead of 0.9250.