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The USD/CHF plummets during the New York session, down 1.44%, trading at 0.9223 at the time of writing. In the overnight session, COVID-19 jitters, around a new virus variant called NU, found in South Africa, dented the market sentiment, as safe-haven currencies like the Swiss franc and the Japanese yen are rising against most G8 currencies, including the US dollar.
In the overnight session, the USD/CHF traded near the highs 0.9350s, but the news of the new COVID-19 NU variant found in South Africa spurred the downward move in the pair, breaking crucial levels on the way south. The 50-day moving average (DMA) at 0.9234 has been broken at press time, exposing the 100-DMA right around the 0.9200 figure.
Data coming out of South Africa keeps the global scientific community on alert. There is a chance that the NU variant might be more virulent than the Delta, and it could be vaccine-resistant. According to scientists, it has a high number of mutations on the spike protein, and it is the “most evolved” variant yet discovered from the original virus.
That said, in the near term, USD/CHF traders would lie on COVID-19 developments, alongside macroeconomic outlook and market sentiment, which could offer some fresh impetus to act on it.
The USD/CHF is south of the 50-DMA, approaching the 0.9200 figure, trading near two-week lows. Nevertheless, the fundamentals have not changed as the move was triggered by market sentiment, so the pair is tilted to the upside. Also, the October 26 swing high at 0.9226 resistance-turned-support, alongside the 50-DMA, capped the downside move at the moment, but a daily close over the levels mentioned above is needed to confirm a bottom.
On the way south, the confluence of the 100-DMA and the 0.9200 figure would be the first support area. A breach of the latter would expose crucial support levels, like the 200-DMA at 0.9168, followed by 0.9100.
On the flip side, in the outcome of reclaiming 0.9230, that would expose the July 2 swing high at 0.9274, followed by the 0.9300 figure.