USD/CHF tumbles to lowest since November 2021 on lower yields and weaker Dollar

• Swiss Franc rises sharply versus Dollar and Euro.
• Expectations about a less hawkish ECB support the Swiss Franc.
• USD/CHF falls for the fifth consecutive day on Wednesday.

The USD/CHF is falling by almost a hundred pips on Wednesday after trimming some losses during the last hour. The pair bottomed at 0.9084, the lowest level since November 2021 and then rebounded rising back above 0.9100.

The decline in European and US government bond yields weakened the US Dollar and favored the Swiss Franc. The Switzerland 10-year bond yield dropped to 1.05%, the lowest since early December and the US 10-year yield fell to 3.38%, lowest since September.

The demand for European bond strengthened after data showed a slowdown in inflation and some “not so bad” activity figures; and particularly following a media report on Tuesday that mentioned European Central Bank policymakers are starting to consider a slower pace of interest rate hikes after the February meeting.

Expectations of a less hawkish ECB sent the Euro to the downside, and it continues to be a drag. EUR/CHF has fallen sharply, reversing sharply from six-month highs near 1.0100 to levels under 0.9900.

Economic data released on Wednesday weighed further on USD/CHF. Inflation numbers came in below expectations, while Retail Sales and Industrial Production dropped more than market consensus.

USD/CHF breaks 0.9200

The USD/CHF is consolidating below 0.9200, reinforcing the bearish bias. On the flip side, the next critical support is the 0.9100 area. A daily close below would open the doors to more losses. A recovery back above 0.9220 would alleviate the negative tone.

Technical levels