UBS recommended that investors open short positions on the pair, pointing to attractive entry levels into the transaction. The firm highlighted that the DXY index, which measures the US dollar’s strength against a basket of currencies, was down 1.5% from its peak in late April due to disappointing US economic data.
Despite the Federal Reserve’s hawkish stance, with officials hinting it will take months to adjust data before considering a rate cut, the US dollar is under mixed pressure.
On the one hand, the Fed maintains a tough stance on monetary policy, and on the other, economic indicators in the United States are showing signs of deterioration.
UBS emphasized a cautious approach, advising selectivity in directional dollar trades. This strategy fits the current economic climate, where policymakers and economic data are sending mixed signals.
In addition to recommending a short USD/CHF position, UBS also reported closing a long 0 position, albeit for a small profit. This move reflects their response to changing market conditions and their ongoing assessment of the value of the currency.
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