USD/CHF Price Analysis: Nosedives towards 0.9700 accumulating 300-pips of losses after reaching parity

• Since Tuesday, USD/CHF has collapsed by more than 300-pips, and it is down 1.69% on Thursday.
• The US Dollar Index has fallen in the week so far by 1.68%, weighed by falling US bond yields.
• USD/CHF Price Forecast: To dip towards the 50-DMA before resuming the upward bias.

The USD/CHF plunges 100-pips and falls for the third consecutive trading day and is trading below the 20-day moving average (DMA) and 300-pips below the parity achieved on May 12. At 0.9705, the USD/CHF reflects the aforementioned, mainly attributed to US dollar weakness and falling US Treasury yields.

Investors’ mood remains negative. US equities begin to prepare for the New York close, and even though they are down less than 1%, they are set to finish Thursday’s session with losses, except for the Nasdaq 100. China’s lockdowns remain a concern for market players, as domestic Covid-19 flare-ups in other provinces threaten to trigger restrictions again.

The US Dollar Index, a gauge of the greenback’s value vs. a basket of six peers, is retreating more than 1%, sitting at 102.701, a headwind for the major. Furthermore, US Treasury yields extend their fall for the second straight session, losing three and a half basis points, down at 2.853%.

In the meantime, the Swiss National Bank (SNB) Chairman Thomas Jordan said on Thursday that the central bank is not “hostage” to other central banks and emphasized that the bank has an “autonomous monetary policy with a focus on price stability.” Furthermore, Jordan stated that “we remain ready to intervene in currency markets when necessary” and reiterated the need for an accommodative stance.

USD/CHF Price Forecast: Technical outlook

The USD/CHF daily chart depicts the pair as upward biased, despite the major tumbled below the 20-DMA at 0.9816. Supporting the previously-mentioned are the daily moving averages DMAs, sitting below the exchange rate. However, the Relative Strenght Index (RSI) at 47.20 is in bearish territory, and the speed of the downward move could find some support around the 0.9530s area, where the 50-DMA rests.

That said, the USD/CHF first support would be 0.9700. A breach of the latter would expose the June 5, 2020, daily high-turned-support at 0.9652, followed by the figure at 0.9600 and the aforementioned 50-DMA at around 0.9536.

Key Technical Levels