USD/CHF drops to test multi-year lows near 0.9050

  • US dollar holds onto weakens at the beginning of the week.
  • USD/CHF drops for the fourth consecutive day, it heads for the lowest close since 2015.

The USD/CHF broke below 0.9065 and dropped to 0.9050, reaching the lowest level since August 5 and just one pip above the five year low it hit earlier in the current month.

As of writing, the pair is trading at 0.9060, down for the fifth day in-a-row and about to post the lowest daily close since January 2015, when the Swiss National Bank abandoned the EUR/CHF 1.20 floor.

The move lower on Monday is being driven by a weaker greenback. The US Dollar Index (DXY) falls 0.25% and is strands around 92.80, still above the year-to-date low of 92.50.

Between risk sentiment and a weaker US dollar

“Positive European developments and improving global risk sentiment will help CHF weaken. Tail risks that could lead to “flight to safety” inflows to Switzerland include material escalation in COVID-19 cases, rising geopolitical tensions (e.g. Italy, Brexit), uncertainty near to the US election, US-China trade war escalations”, explained analysts at CitiBank.

The outlook for the dollar is not positive at the moment, so even if the CHF retreats, the USD/CHF could head even lower. The 0.9050 support holds the key in the short-term. A break lower would likely expose 0.9000; below the next support stands at 0.8960. If the pair remains above 0.9050, a bullish correction seems likely.

Technical levels

 

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