USD/CHF pulls back below 0.9750 after Fed’s decision
- USDCHF pullback from 0.9767 extends below 0.9750 after Fed's decision.
- The USD depreciates as Fed Powell’s faces its press release.
- The Fed commits to keep rates near zero and use all tools at hand to support the economy
The US dollar rebound from day lows at 0.9712 has been capped at 0.9767 and the pair is pulling below previous highs at 0.9750 after the Fed released its monetary policy statement. The market has reacted selling the US dollar to the Federal Reserve’s decision to maintain its target rate and to use all their monetary tools to support economic recovery.
Fed: rates on hold and full commitment to support recovery
The Federal Reserve has kept its target rate unchanged at 0%-0.25%, as widely expected, and has assured an accommodative monetary policy for the foreseeable future. Furthermore, the committee pledges to use “its full range of tools to support the US economy”.
The Bank has warned about the risks of the COVID-19 shock to near and medium-term economic outlook to assure that the target rate will remain near zero until the economy has weathered recent events” and is on track to achieve maximum employment and price stability.
Regarding monetary measures, the Federal Reserve has confirmed its plan to continue buying Treasury securities and agency residential and commercial mortgage-backed securities to support the flow of credit to households and businesses. Besides, the Open Market Desk will continue offering large-scale overnight and term repurchase operations, monitoring closely market conditions and ready to adjust plans as appropriate.
USD/CHF might be losing momentum
The 4-hour chart shows the USD/CHF consolidating between 0.9700 and 0.9800 after bouncing up from 0.9595 lows and trading above the main moving averages. The cross of the 100 SMA below the 50 and the 200 SMA, however, suggests the possibility of a bearish turn that might send the pair back towards 0.9712 (April 27 low) and below there, 0.9668 (April 22 low) and 0.9595 (April 14 low).
On the upside, immediate resistance lies at 0.9800 (April 3, 6 and 24 highs) and 0.9900 (March 24 high) before aiming for late 2019 highs at 1.0024.