• The dollar fails to return above 0.9200, edges down to 0.9170 area.
• US dollar loses momentum on the back of softer US T-bond yields.
• USD/CHF remains weak while below 0.9200.

The US dollar is trading lower on Wednesday after having failed to return above 0.9200. The pair depreciates 0.3% on the daily chart, retreating towards the 0.9170 area amid moderate dollar weakness.

The USD loses ground amid lower US Treasury bonds

The pair has confirmed its reversal from Tuesday’s high at 0.9225 weighed by broad-based US dollar weakness. The decline in US T-Bond yields, which have fueled USD’s rally from late July lows is pulling the dollar lower across the board.

The yield on the benchmark 10-year note has dropped to 1.52% on Wednesday, down from the multi-month highs at 1.68% hit last week. The hawkish message from the Bank of Canada, which confirmed the end of its QE program earlier today, has rattled debt markets with the investors bracing for a similar decision by the Federal Reserve at next week’s meeting.  

On the macroeconomic front, US data has been mixed today with orders for durable goods manufactured in the US contracting less than expected in September, due to a solid increase of non-defense capital goods. On the other hand, the US goods trade deficit widened to $96.3B in September from $89.4B in the previous month on the back of a sharp decline in exports which will have a negative impact on the third quarter’s growth.  

USD/CHF: Near-term trend remains negative below 0.9200

Technical indicators show the near-term USD/CHF trend biased lower, after having broken the upward channel from early August lows, with next potential targets at 0.9150 (October 22 and 24 lows) and 0.9100 (August 18 and 30 lows), which might expose August 4 low at 0.9020.

On the upside, a bullish reaction past 0.9225 (October 26 high) would ease negative pressure and confirm the breach of trendline resistance, increasing positive traction towards October 18 high at 0.9275 and then 0.9310 (October 12 and 13 highs).   

USD/CHF Daily Chart 

Technical levels to watch