• US dollar recovery attempts capped at 0.9170.
• The dollar remains bid as Fed tightening expectations fade.
• USD/CHF: Expected to drop towards 0.9081– Commerzbank.

The US dollar has attempted to bounce up from six-week lows at 0.9120, following a three-week decline from levels above 0.9300. The pair, however, has lacked follow-through, with the 0.9170 resistance area keeping upside attempts on hold.

The Swiss franc strengthens amid a risk-off mood

The greenback has failed to perform a significant recovery on Friday and is on track to close a three-week decline, with the Swiss franc favored by the risk-off market mood. Concerns about inflation and the supply chain bottlenecks have returned to the spotlight, with expectations about Fed rate hikes fading.

Federal Reserve Chairman, Jerome Powell has provided some support for the USD in a virtual appearance, confirming the bank’s commitment to start reducing bond purchases. The dollar’s reaction, however, has been limited, with nothing new coming out of the speech, as Powell downplayed the possibility of interest rate hikes in the coming months.

USD/CHF expected to depreciate further, aiming 0.9081 – Credit Suisse

From a technical perspective, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, sees the pair in a broader downside trend, heading to levels below 0.9100: USD/CHF is vulnerable near-term, it is under pressure and we would allow for further losses (…) It is possible that this is only an ABC correction but intraday Elliott wave counts remain negative and we suspect that the market will see a deeper sell-off to the 0.9142 200-day ma and potentially the 2020-2021 uptrend at 0.9081.” 

Technical levels to watch