Just like the EUR/USD, the USD/CHF currency pair is at a key support level. Risk appetite market sentiment is growing increasingly wary amid persistent trade tensions and developing concerns over stagflation. The duo is now charting a critical crossroads. US Dollar Index (DXY) trading at 100.3000. US Dollar Index (DXY) recently made a near-month high which reached 100.8600. This index tracks the performance of the US dollar against a basket of six major currencies, reflecting the broader dynamics affecting the forex market.
Those upcoming US-China trade talks are scheduled for this weekend in Switzerland. These debates are raising the current concerns about the USD/ CHF to a new level. President Trump has mentioned that he’s willing to reduce the tariffs by 50% if China shows good faith. Analysts worry that US position is looking increasingly weak as these important discussions loom. This change has potential to change the prevailing market sentiment in the upcoming days.
With USD/CHF hanging around its critical support area, traders are looking intently for clues of continuation. The next immediate downside support level is at 97.7300. Additional support layers are found at 96.9400, 95.2500, and 94.5600. Any move below this newly established support would be bearish, suggesting a future trip back down to new multi-year lows for the currency pair. Futures markets suggest traders are bracing for just such a scenario.
Resistance for USD/CHF is seen at 101.9000, with the 55-day Simple Now Moving Average (SMA) now sitting at 102.4700. If the sentiment on the dollar remains negative overall, we could see USD/CHF trend lower towards 0.8900 and even 0.8800 targets. This only has the potential to exacerbate fears of more drops to come.
Geopolitical tensions and other major economic indicators are starting to weigh on market sentiment. Taken together, these three factors point to a possible slowdown in growth ahead. Traders’ confidence in US dollar is largely influenced by these factors. In light of these factors, the upcoming trade talks take on added significance.