USD/CHF drops below 0.9800 despite broad-based USD weakness
- Market sentiment stays positive after US announces $2 trillion stimulus package.
- US Dollar Index extends slide toward 101 on Wednesday.
- Coming up: Durable Goods Orders from US and SNB's Quarterly Bulletin.
The USD/CHF pair closed the day with modest losses on Tuesday and extended its slide on Wednesday as the CHF struggles to find demand in the risk-on market environment. As of writing, the pair was down 0.3% on a daily basis at 0.9785.
The US Congress finally reached a deal on the coronavirus response bill that will be worth around $2 trillion. Major equity indexes in Asia posted strong gains to reflect the upbeat mood and European stocks stretched higher. Although it erased a portion of its earlier gains, the Euro Stoxx 50 is still up nearly 1% on the day.
USD struggles to find demand
On the other hand, easing worries over USD shortages in USD funding markets and a protracted recession in the US caused the US Dollar Index (DXY) to continue to retreat from the multi-year highs that it set near 103 at the beginning of the week. At the moment, the US Dollar Index is down 0.5% on the day, helping the pair limit its losses for the time being.
The US economic docket on Wednesday will feature Durable Goods Orders for February and Housing Price Index for January. More importantly, investors are likely to keep a close eye on markets' risk perception in the second half of the day. Finally, the Swiss National Bank will release its Quarterly Bulletin.
Technical levels to watch for