USD/CHF tests 0.9700 as USD selloff picks up steam
- USD/CHF fell to fresh five-day lows at 0.9690 on Monday.
- USD struggles to find demand as risk-on flows dominate markets.
- Major equity indexes in the US post strong gains.
After moving sideways near 0.9720 during the first half of the day, the USD/CHF pair lost its traction and dropped a fresh five-day low of 0.9690 in the early American session. As of writing, the pair was down 0.12% on the day at 0.9702.
DXY turns south on Monday
The broad-based USD weakness seems to be causing USD/CHF to push lower on Monday. The sharp upsurge witnessed in global equity indexes is causing the greenback to lose interest. Reports suggesting that the biotech company Moderna is getting positive results from the first human tests of its coronavirus vaccine boosted the market sentiment at the start of the week.
Reflecting the upbeat market mood, the Dow Jones Industrial Average is up nearly 3% while the S&P 500 Index is gaining 2.6%. Meanwhile, the US Dollar Index (DXY), which tracks the USD's performance against a basket of six major currencies, is losing 0.3% at 100.05.
The USD's market valuation could continue to drive the pair's action in the remainder of the day. However, the CHF is likely to have a difficult time gathering further strength against the USD as investors are likely to focus on more risk-sensitive currencies.
The FOMC meeting minutes on Wednesday and FOMC Chairman Powell's testimony on Thursday will be watched closely by the market participants.
Technical levels to watch for