USD/CHF testing three-week lows at 0.9855 after pulling back from 0.9930

• The dollar fails at 0.9930 and returns to the 0.9855 support area.
• Hopes of slowing down by the Fed are weighing on the USD.
• Downside risks have increased below 0.9925.

The US dollar resumed its downtrend against the Swiss franc on Wednesday. The mild recovery attempt witnessed during the European session has been capped at 0.9930, and the pair gave away gains, later on, to test the 0.9855 area at the moment of writing.

The USD dives on Fed pivot expectations

The greenback is depreciating across the board for the second consecutive day, with investors starting to price in a slowdown on the Federal Reserve’s tightening path. A recent batch of negative indicators in the US has boosted concerns about the impact of the Fed’s hawkish policy in economic growth.

The market is still awaiting a 75 basis points hike next week, although the expectations for December have been downgraded to a 0.50% hike. This is hurting the USD, which had been surging over the last months, propelled by the Fed’s radical tightening pace.

USD/CHF: Downside risks have increased below 0.9925

Below 0.9925, the consolidative pace of the last three weeks has been broken, adding negative pressure on the pair. Immediate support lies now at 0.9850 (200-day SMA) before 0.9785 (October 4, 6 lows) and 0.9740 (September 29 low)

On the upside, the pair should return above the mentioned 0.9925 and the 100-day SMA, at 0.965 to ease negative pressure before setting its focus at the 1.0000 psychological level.

Technical levels to watch