UBS recommended that investors short the pair, indicating an attractive entry level for trading. The company highlighted that the DXY index, which measures the strength of the US dollar against a basket of currencies, fell 1.5% from its peak in late April due to disappointing US economic data.
Despite the Federal Reserve’s hawkish stance, with officials hinting that it would take several months of moderation before considering rate cuts, the U.S. dollar is experiencing conflicting pressures.
On the one hand, the Fed is maintaining a tight monetary policy, while on the other hand, US economic indicators are showing signs of deterioration.
UBS emphasized a cautious approach and advised being selective when executing directional trades with the dollar. This strategy is in line with the current economic climate, which is showing mixed signals from policymakers and economic data.
In addition to recommending a short position on USD/CHF, UBS also reported closing their long position on USD/CHF, albeit with a marginal gain. This move reflects their response to changing market conditions and their ongoing assessment of currency valuations.
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