USD/CHF came under renewed selling pressure on Monday
The USD/CHF pair met with a fresh supply on the first day of a new week and dropped back closer to a nearly two-week low touched on Friday. The pair, however, managed to trim a part of its intraday losses and was last seen trading just above mid-0.9600s during the early North American session. The Swiss Franc continued drawing support from a surprise hawkish shift by the Swiss National Bank (SNB), which joined other major central banks and delivered a 50 bps rate hike on Thursday. In the accompanying policy statement, the SNB left the door open for further rate hikes to counter rising inflationary pressures. This, along with the emergence of fresh US dollar selling, exerted some downward pressure on the USD/CHF pair.
Investors took comfort from the fact that the Fed forecasted the rate to decline to 3.4% in 2024 and 2.5% over the long run from the anticipated 3.8% in 2023. This was seen as a key factor behind the recent sharp decline in the US Treasury bond yields, which kept the USD bulls on the defensive. That said, expectations that the US central bank would stick to its aggressive policy tightening path should act as a tailwind for the greenback. Apart from this, a generally positive tone around the equity markets might undermine the safe-haven CHF and lend some support to the USD/CHF pair. Investors might also be reluctant to place aggressive bets amid absent relevant economic data and relatively thin trading volumes on the back of a holiday in the US. This makes it prudent to wait for a convincing break below the 0.9600 mark before positioning for any further depreciating move.