USD/CHF drops to 2-week lows on US tax plan
- Senate Republicans want to delay tax cut for corporations to 2019.
- USD & Wall Street dropped sharply.
- USD/CHF signals more corrective moves ahead.
The USD/CHF pair ended days of limited moves in a range with a bearish breakout. During the US session, a slide across the board of the greenback sent the pair to 0.9920, the lowest level since October 26.
News from the Senate disappointed market participants. Republicans plan includes a delay to the anticipated tax cut for corporations to 2019. The Dow Jones was falling 0.55% after being down as much as 0.9%. Gold rose back toward daily lows, and the 10-year yield fell from 2.34% to 2.32%. The US Dollar Index fell to test the 94.25 area.
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Meanwhile, in Europe, Swiss National Bank President Thomas Jordan repeated that the Swiss franc is significantly overvalued and added that the central bank still has room to maneuver in its policy. His words were no surprise.
Correction starting?
The USD/CHF is falling around 60 pips, enough to be the worst performance in almost two months. The slide pushed the price below relevant short-term technical levels and could signal more correction ahead. The greenback failed to rally late in October above 1.0015 and in November showed difficulties holding on top of the parity level.
The immediate target appears to be the 20-day moving average at 0.9905. Below that level, the next strong support is seen at 0.9840. If the pair rises significantly above 0.9940 it would move back to the previous trading range.