• USD/CHF came under intense selling pressure on Thursday after SNB’s surprise rate hike move.
  • The risk-off impulse further benefitted the safe-haven CHF and contributed to the steep decline.
  • Resurgent USD demand might hold back traders from placing aggressive bets and limit losses.

The USD/CHF pair witnessed a dramatic turnaround on Thursday and tumbled nearly 200 pips from the 0.9990 area after the Swiss National Bank (SNB) announced its policy decision. The sharp downfall – marking the second successive day of a negative move – dragged spot prices below the 0.9800 mark, or a fresh weekly low during the early European session.

The SNB surprised markets with a 50 bps rate hike, bringing the policy rate to -0.25% at the end of the June monetary policy meeting. In the accompanying policy statement, the SNB left the door open for further rate hikes to counter rising inflationary pressures. This, in turn, provided a strong boost to the Swiss franc and prompted aggressive selling around the USD/CHF pair.

Apart from this, the risk-off impulse – as depicted by a generally weaker tone surrounding the equity markets – further drove haven flows towards the CHF and contributed to the USD/CHF pair’s downfall. That said, resurgent US dollar demand might hold back traders from placing aggressive bearish bets and help limit deeper losses for the major, at least for the time being.

Market participants now look forward to the post-meeting press conference, where comments by the SNB Governor Thomas Jordan and Governing Board Members will influence the CHF. Apart from this, the broader market risk sentiment and the USD price dynamics should produce some meaningful trading opportunities around the USD/CHF pair.

Technical levels to watch

This article was originally published by Fxstreet.com.Read the original article here.

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