USD/CHF turns flat on day on limited market reaction to FOMC minutes

Although the USD/CHF pair fell to a session low at 0.9637 on the knee-jerk reaction to FOMC minutes, it didn't have a difficult time erasing its losses and is now trading at 0.9665, remaining near the opening level of the day, while the US Dollar Index is at 96.08, up 0.09%.

Investors who were expecting a road map regarding the balance sheet reduction were disappointed as the minutes showed that officials were divided on when to start it. While several policymakers wanted to announce the start of the balance sheet trimming within a couple of months, others said that they saw benefits in deferring it to later this year.

• FOMC Minutes: Policymakers saw recent increase in import prices as consistent with inflation trend in medium term

Furthermore, it was unclear how concerned policymakers were about the recent slowdown in inflation. According to the minutes, although most officials see the softness in Inflation having little impact on the inflation trend, some sounded worried as they thought that the softness could persist due to limited pass-through from resource utilization.

• CME Group FedWatch September hike probability virtually unchanged after FOMC minutes

Regardless of the initial fluctuations, most of the major pairs struggled to move away from their pre-FOMC levels and now investors are likely to remain on the sidelines until the Nonfarm Payroll report on Friday.

Technical outlook

Recent technical levels for the pair preserve their validity. The initial hurdle aligns at 0.9675 (20-DMA) ahead of 0.9735 (Jun. 26 high) and 0.9800 (psychological level/May 30 high). On the downside, short-term supports could be found at 0.9600 (psychological level), 0.9550 (Jun. 29 low) and 0.9500 (psychological level).