USD/CHF off lows, still in the red below mid-0.9700s ahead of FOMC
- USD/CHF once again managed to find some support ahead of 100-DMA.
- The USD remained depressed after worse-than-expected US GDP report.
- Wednesday’s key focus will remain on the FOMC monetary policy update.
The USD/CHF pair managed to recover a major part of its early slide and moved back closer to the top end of its daily trading range, albeit the uptick fizzled out rather quickly.
The pair continued showing some resilience at lower levels and once again attracted some dip-buying ahead of the 0.9700 round-figure mark. The mentioned level marks 100-day SMA support, which has acted as a strong base over the past one-week or so.
The upbeat market mood, amid indications that the worst of the Coronavirus crisis might be over already, undermined the Swiss franc's safe-haven demand. This, in turn, was seen as one of the key factors lending some support to the major.
However, the prevalent bearish sentiment surrounding the US dollar failed to provide any additional boost. The USD maintained its offered tone following the disappointing release of US GDP report and kept a lid on any meaningful upside for the pair.
The advance estimates showed that the US economy contracted sharply, by 4.8% annualized pace during the first quarter of 2020. The reading was worse than 4.0% fall expected and illustrated the severity of the economic damage caused by the coronavirus outbreak.
With the key US macro data out of the way, market participants are likely to move on the sidelines and refrain from placing any aggressive bets heading into Wednesday's key event risk – the latest FOMC monetary policy decision.
From a technical perspective, traders are likely to wait for a sustained break through the 0.9700 (100-day SMA)-0.9800 (the very important 200-day SMA) one-week-old trading range before positioning for the pair's next leg of a directional move.
Technical levels to watch