USD Fades Going Into Late-Session

The USD is fading against the majors going into late-session trade. New hopes over a Brexit deal have sent European currencies to the bull, led by the GBP, Euro, and Swiss franc. In addition, this morning’s U.S. Retail Sales numbers haven’t done the Greenback any favors, as the American economic outlook continues to degrade. 

Earlier today, Comments from Chicago FED Chairman Charles Evans suggested that the FOMC may want to consider another 2019 rate cut. Evans stated that “policy is probably in a good place right now,” but he is “open-minded” to further easing. The CME FEDWatch Index is taking Evan’s comments to heart, boosting the odds of a 30 October ¼ point cut to 90.3%. This is a 16.5% uptick from yesterday.

Dovish FED Sentiment Dominates USD 

Broad-based weakness has been the story of the day for the USD. Accordingly, the USD/CHF has been on a freight train south toward the .9900 level.

Here are two USD/CHF support levels worth keeping an eye on for the late session:

• Support(1): Bollinger MP, .9939
• Support(2): Psyche Level, .9900

Overview: At press time (about 1:30 PM EST), the Greenback is in a relative freefall vs the majors. The dovish tone from Evans has added to investor angst stemming from this morning’s lagging Retail Sales numbers. For now, an economic pullback is expected and further FED rate cuts are being priced into the markets.

For the USD/CHF, price action has been constrained between the .9900 and 1.0000 levels since late-September. If we see rates continue to fall, a long trade is likely to set up from the vicinity of .9900. Given the lack of primary market drivers facing the USD/CHF scheduled for the rest of this week, playing a bullish rotational strategy from .9900 isn’t a bad way to get in on the action.