USDCHF: CFTC Positioning Report Indicates New Headwinds for USD

The USD may continue to come under pressure if the latest CFTC Positioning Report is anything to go by. The CFTC Positioning Report for the week ended June 2 indicates the net long positions on the USD have hit three-month lows. The US Dollar has been sold relentlessly in the past one week, and the trend looks set to continue if traders continue to trim any positions that bet on USD strength. 

So how is this sentiment playing out right now?

A look at the USDCHF pair shows that the USD continues to remain under heavy selling pressure, which extends Monday’s selloff on the USDCHF. Markets are in risk-off mode, and this is benefitting the Swiss Franc this Tuesday. A drop in bond yields is also forcing investors to sell the US Dollar. 

The latest consignment in the FOMC’s rate decisions and policy statements comes up tomorrow. Tomorrow’s FOMC update also comes with a report that details the Fed’s Economic Projections. The FOMC’s pronouncements will shape the direction of the USD in the near-term, and traders will need to watch out for it in deciding further positioning on the USDCHF.

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Technical Outlook for USDCHF

The USDCHF’s move of today succeeded in breaking below the 0.95496 support level and is now challenging new support at 0.94963 (previous low of March 30 2020). A break below this area targets the 0.94324 and 0.94004 (previous low of March 16 2020), all in the near-term.

On the flip side, a bounce off 0.94963 may allow for a retracement towards the broken support at 0.95496. This former support that now functions as resistance could withstand a pullback, leading to the resumption of the pair’s decline if risk-off sentiment remains pervasive. However, a drop in safe-haven demand which allows the price to push back above this level then targets the resistance at 0.96535, with the possibility of extending towards 0.97793, where the 20-day moving average also serves as a dynamic resistance.

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