US Dollar To Depreciate As Swiss Franc Gains Strength

The dollar is under some pressure as falling Treasury yields weigh on the dollar. The Swiss franc is actually in the spotlight, continuing short-term gains against both the dollar and the euro. It was a two-half month, with the initial performance of the US dollar towards the end of the month being driven in part by updated policy guidance from the Fed at the FOMC meeting.

At the core of economists’ view of the depreciation of the US dollar is that many other G10 central banks will tighten policy before the Fed, as global economic growth remains robust. The keynote statement that “the Committee will continue to assess progress in upcoming meetings” suggests that it will take longer to assess the meeting’s “further substantive progress”.

The July FOMC news appears to have helped restore confidence in the new monetary policy framework, which implied weaker and longer monetary policy aimed at raising inflationary expectations. St. Louis Fed President James Bullard told Reuters that current inflation, which is well above the Fed’s target, is at levels that former presidents such as Alan Greenspan “would immediately try to suppress.”

He called for urgent action to end the asset purchase program. “We are not going so proactively. Our models say the situation is stabilizing, but for now, it will be rather unstable, “he said,” I want to be prepared and prepare the committee for the risk that this is an unpredictable situation.”

As the US Dollar Declines, Swiss Franc Gains Strength

Earlier in the day, data from Switzerland showed that overall consumer confidence improved sharply in July, with consumer sentiment rising to a higher level since July 2010 at 8. “Expectations for overall economic growth, in particular, contributed to the strong improvement. In terms of consumer sentiment, the sub-index climbed to its highest value (48 points) since the study began in 1972, ”SECO notes in its publication, and since the release of this report, the Swiss franc is gaining strength.

The fall of the USD/CHF pair continues today and still reaches a minimum of 0.9022. Intraday bias remains bearish on a retest of 0.8925 low. On the other hand, a break of minor resistance at 0.9074 would make the intraday tone neutral.

But one more fall will be in favor as long as the EMA holds at 0.9126. After hitting its lowest level since mid-June at 0.9022, the pair appears to have entered a phase of consolidation and last lost 0.27% to 0.9039 at this time.